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Newsletter

New charges proposed for Nest

By Tom Farley, Wed 17 Mar 2010 - Published in Pensions

The expected charges for the National Employment Savings Trust (Nest) have been set out by the government.

According to the Department for Work and Pensions, the Nest is expected to have an annual management charge of 0.3 per cent over the longer term, in order to meet the Pension Commission's goal of it being a low-cost scheme.

The department explained that to cover the cost of setting up the trust, a charge on contributions of around two per cent will be included in the initial level of charges.

This will mean the Nest has similar fees to those applied by large occupational schemes and allow low-to-moderate earners to benefit from charges normally only experienced by people earning high salaries or working for big companies.

Angela Eagle, the minister for pensions and the ageing society, commented: "This is a fair and sensible funding package which delivers the Pensions Commission's vision of a low-cost scheme in an affordable way. It balances the needs of members, taxpayers and the interest of the broader pensions industry."

Earlier this month, Charlie Kirby, deputy editor for Pensions Week, claimed that a total of £150 billion in public funds could be saved by 2050 if the state pension age was increased to 70.