There is much debate surrounding the creation of the National Employment Savings Trust (NEST), a new workplace pension scheme, designed with low-moderate earners in mind and due to begin rolling out in 2011. It’s being developed and instigated in line with the government’s policy of auto-enrolment, which will come into play in 2012.
An employer doesn’t have to use NEST to ensure they comply with legislation, and with so many pension schemes already out there which will provide full compliance, what does NEST have to offer?
It’s a question NEST’s Chief Executive Tim Jones knows is out there, and he’s keen to set the record straight. During a recent interview, Jones addressed the issue head-on, saying that NEST will fulfil a critical need by being more commercially attractive to private sector organisations with staff who fall into the low-moderate income bracket.
Therefore NEST’s target is to open up pension schemes to those who may have not been able to plan for retirement previously. For this reason it has received government funding, to be paid back from member charges once the scheme is on its feet. “Today, there are four people of working age in society for every retired person,” Jones said. “By 2050, that ratio will be two people for every retired person. We are not implementing the reforms for any other reason than to increase the number of people saving more. That is what society needs.”
Jones further added that the scheme has been, and will continue to be, tested amongst its target audience, with a constant feedback loop that ensures the scheme continues to adapt in response to the requirements of the low-moderate earning employer and employee.
Crucially, Jones was at pains to point out that there is one way in which NEST is not breaking new ground. Although the scheme has received government funding, it is not a state pension scheme. NEST is a trust-based occupational pension scheme, both legally and in practice, and Jones was very clear that it will be run as such for the duration.