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About pension reform

The Pensions Act 2008 places new duties on employers of UK workers. You can find out more about these new duties and what they mean for your organisation. New duties

Using NEST

NEST is a low-cost pension scheme that will give employers a straightforward way to meet the new duties that will be introduced as a result of the Pensions Act 2008.

It's been designed around the needs of its members and their employers.

Employers can use NEST early. This will give them and you, time to use NEST before their duty date.

It will also enable employers to benefit from extra dedicated support from the NEST team.

How much do your clients need to pay in?

From 2012, employers are legally required to make minimum contributions into a qualifying workplace pension scheme. This could apply to some or all of their workers.

If using a defined contribution scheme such as NEST, this minimum starts at 2 per cent of qualifying earnings, of which the employer must pay 1 per cent. It will rise gradually to 8 per cent by 2018†, of which the employer must pay at least 3 per cent.

More on minimum contributions

Contributing more

Your clients can pay more into NEST if they want to, subject to our annual contribution limit.The limit for each member's retirement pot in one tax year is £4,400* in January 2012/13 terms.

For employers who choose NEST early we’ll apply the initial legal minimum of 2 per cent. Your clients will still be able to contribute more if they want to.

Have a question? Email us at intermediary.enquiries@nestcorporation.org.uk

How does NEST cover costs?

NEST collects an annual management charge (AMC) of 0.3 per cent on the total value of a member’s fund, calculated on a daily basis.

At the end of each year, the AMC is taken out of each NEST member’s investment fund and reflected in the daily unit price.

Until the costs of setting up the scheme have been met, members will also pay a small charge of 1.8 per cent, on each new contribution they make.

Together, the charges are broadly equivalent to a 0.5 per cent AMC. This gives our potential members access to the sort of low charges enjoyed by people in large occupational schemes today.

NEST has agreed a loan with the Department for Work and Pensions (DWP), which will pay for the scheme to be set up and cover the expected funding shortfalls in earlier years, while the membership is growing. This will be repaid through member charges.

How is NEST designed for its members?

• NEST helps employers to meet their new employer duties. They can also contribute more than the minimum for their workers if they want
• NEST offers clear communications. Workers have 24/7 access to straightforward information online without having to go through their employer
• NEST uses an investment approach that’s built around its members, so employers can be sure we’re acting in members’ interests
• Members' retirement pots travel with them throughout their working life. There's no ongoing administration for employers if someone leaves their organisation
• If employers choose NEST early we can provide them with extra support to help them use the scheme
• NEST will carry out a number of administrative duties on behalf of the employer such as managing the opt-out process to reduce the administrative burden on them