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Average Earnings Index

Annual contribution limit

The maximum amount that, until April 2017, could be paid into a Nest member’s retirement pot in one tax year. This included member contributions, any contributions from their employer and any tax relief from the government. The amount may have been higher for members who had more than one employer. The annual contribution limit was £4,900 for 2016/17. On 1 April 2017, the limit was removed completely. It was also referred to as the contribution cap.


Annual management charge (AMC)

This is a charge taken on the whole of a Nest member’s retirement pot each year. Nest’s AMC is currently 0.3 per cent.


A person who receives, or is entitled to, an annuity.


A financial product that provides a regular income stream for a fixed period or for the rest of a employees life. Nest often refers to annuities as products providing a retirement income.


Auto enrolment

Employees who meet certain requirements are enrolled into a qualifying workplace pension scheme, without them needing to ask to be enrolled.

Auto enrolment only applies to workers with qualifying earnings who are aged at least 22 and under State Pension age.


Base scheme

A base scheme is a workplace pension scheme employers use to pay the legal minimum contribution on behalf of their workers. A base scheme can be used alongside another scheme into which the employer can pay additional contributions.


CSV file

A comma-separated values file (CSV) is a type of file that can store data from spreadsheets in a text format.

CSV is widely used and is one of two types of file format you can use to send us information about your workers and the contributions you make to Nest.

The other type of file we accept is XML.

You can download our Microsoft® Excel® template which helps you to create a CSV file.

Compliance regime

A set of powers and processes that The Pensions Regulator (TPR) can use to ensure that organisations comply with their employer duties.


Contracted out

Historically Occupational pension schemes could choose not to participate in the State Second Pension if they met certain conditions. If a scheme was contracted out it meant members would not build up any entitlement to the State Second Pension whilst they were a member. Instead, some of what they would have to pay as National Insurance contributions went into their workplace pension scheme.

Contribution arrangements

This refers to where an employer wants to pay contributions into a retirement pot for a worker who is already a member of Nest.

Contribution charge

Nest's members will pay a small charge on each contribution that's paid into their pot. This charge is currently set at 1.8 per cent. The contribution charge does not apply on transfers into Nest.

Contribution schedule

To process contributions an employer must fill out a contribution schedule. This details all the actual contributions made in each pay reference period.

Contribution schedules include an entry for each member enrolled, with:

  • the name of the employee and their National Insurance number
  • their earnings in the pay reference period
  • the amount of employer and employee contributions paid into their pot.




Department for Work and Pensions. This is the government department that partners with Nest as a Public Corporation.


Defined benefit pension scheme

A type of pension scheme that promises a certain level of retirement income to its members. The amount of retirement income is usually a fraction of the employees yearly earnings for each year they have been a member of the scheme. For example, it might be 1/60th of final pay for each year.

Defined contribution pension scheme

A type of pension scheme where you pay in a set amount each month to build up a retirement pot. You can use this money to get an income – by buying an annuity or another retirement income product - or take it as cash when you retire.



Someone’s earnings include their salary, wages, overtime, bonuses and commission, as well as statutory sick pay, and statutory pay someone receives during paternity, maternity or any other kind of family leave.


These are conditions that somebody must meet to be a member of a pension scheme.

Eligible jobholder

An eligible jobholder is a jobholder aged at least 22 but under State Pension age with qualifying earnings above a certain level. This level is £10,000 a year for the 2020/21 tax year. These figures are reviewed by the government each year.


Eligible employee

These are employees who must be auto enrolled into a qualifying workplace pension scheme. This is anyone aged over 22 who works in the UK and earns over a certain level. The earnings level is £10,000 a year for the 2020/21 tax year.

Employers' Panel

A panel of individuals including employers established to consult with Nest Corporation on how Nest is run.

Employer duties

The Pensions Act 2008 established new duties for UK employers to provide their employees with access to a workplace pension scheme that meets certain legal requirements. Employers have to auto enrol certain employees into a qualifying pension scheme and pay contributions on their behalf.

The duties started in October 2012, and applied to the largest employers first. From 2018 every employer in the UK has to provide a workplace pension.

Employer duty date

The date on which the employer duties first apply to an employer. This is defined in legislation through The Employers’ Duties (Implementation) Regulations 2010.

Employer mailbox

Employers that use Nest will communicate with us through messages sent to and from their own secure online mailbox.


A person who works under a contract of employment or any other contract which requires them to work or perform services personally for another person or organisation.

Employer terms and conditions

The terms and conditions for employers that use Nest. These are based on Nest’s rules.

Enrolment information

The information employers have to give their workers as part of the process of becoming a member of Nest or another qualifying pension scheme.

Entry level scheme

An organisation may already have a pension scheme in place with a waiting period. If so, they can enrol their workers into a separate entry level scheme for the length of the existing scheme’s waiting period.


This refers to the value of what a member leaves behind when they die, including property and possessions, less any debts they owe. If a member doesn’t name someone who should receive their retirement pot if they die before taking their money out of Nest, those savings will be classed as part of their estate.

Ethical investment

Ways of investing money that are in line with a set of ethical criteria set by the trustee.


File Transfer Protocol (FTP)

File Transfer Protocol is one of the ways you can upload large amounts of data about your employees and the contributions you make to Nest. If you want to use FTP you need to let us know so we can help you set up your file transfer software. Once FTP is set up you can upload files using a secure file transfer process.

File format

File format describes the kind of files you use when you send us information about your employees and the contributions you make to Nest. Nest accepts CSV files and XML files. You can use CSV files for uploading information through the Nest website or for sending by File Transfer Protocol (FTP). Only use XML files for sending by FTP.


Funds are a way of investing money. They are made up of shares or units that are owned by all the people that put money in the fund. This is used to buy other investments, for example, shares and other financial products. The value of the shares or units in the fund changes in line with the value of these investments. So, if the fund’s investments increase in value, the shares or units in the fund increase in value. Funds are an efficient way of investing a member's retirement pot in lots of different ways.

Fund manager

This is a person or organisation responsible for managing the day-to-day running of a fund.


Gross annual earnings

How much an individual earns before tax or National Insurance.

Group personal pensions (GPP)

A group personal pension is a set of personal pension arrangements for workers at one organisation. The workers contribute, and the organisation may contribute, through this one arrangement to provide retirement income.

Guaranteed annuity

This is a retirement income that is paid until the person getting it dies. If they die before a certain date, the annuity is then paid to their dependants until that date.



Her Majesty’s Revenue and Customs. It’s the name of the tax office in the UK.

Hybrid scheme

A pension scheme that provides some members with retirement incomes on a defined benefit basis, and other members with retirement incomes on a defined contribution basis, and some members with both.



A physical or mental condition that means a member is incapable of carrying on any occupation.


This is when the money paid into a pension scheme is used to buy financial products like stocks and shares, bonds and properties. These are called investments.

Investment returns

This is the change in value of an investment over a given period of time which can make it worth more or less.

Investment risk

Different financial products such as shares, bonds and cash carry different levels and types of risk to the final value of a member’s retirement pot. More risk could mean that the potential for growing the value of their investment is greater, but there is also an increased possibility that the value may fall. On the other hand, lower risk investments might offer greater security against falls in value but typically with lower potential returns.


Joint life annuity

This type of annuity is paid to one person until they die, and payments continue if that person’s partner is still alive, and are paid to the partner until they die.



Lifetime annuity

A lifetime annuity is a financial product that members purchase with their retirement pot. The annuity provides the person who buys it with a retirement income for the rest of their life. A lifetime annuity must meet the conditions imposed by the Finance Act 2004.



An individual who has joined Nest and has not yet taken their money out of Nest.

Minimum contributions

The minimum amount that needs to be paid into a member's retirement pot under the employer duties. The minimum was introduced gradually and for the 2020/21 tax year is 8 percent.  At least 3 percent of this must be paid by the employer, although the employer can pay more, or all of it if they want to.



National Employment Savings Trust

Nest Retirement Date Fund

Unless they choose a different investment option, this is where a member’s retirement pot will be invested throughout their working life. The money will be put into a fund designed to be ready for the year they expect to take their money out of Nest. For example, if a member plans to take their money out in 2025, their retirement pot will be invested in the Nest 2025 Retirement Fund.

Nominated beneficiary

A person or number of people, trust, charity, club or society that a member chooses to get their retirement pot if they die before taking their money out of the scheme.


Opt in

Employees who have not been auto enrolled can ask to join Nest. If an employee asks their employer to enrol them, they must do so if the employee is based in the UK, is at least 16, and is not already earning benefits in another pension scheme.

Opt out

Employees who have been automatically enrolled into Nest and those with qualifying earnings who have opted in have the right to opt out within one month of the beginning of their membership.

Opt-out notice

A notice given by a member who wants to opt out of Nest.


This is a short way of referring to the National Employment Savings Trust Order 2010, the legislation that established Nest.



Personal Accounts Delivery Authority (the predecessor body of Nest Corporation).

PAYE reference

A PAYE reference number identifies which tax office is associated with a worker and their employer. This number may change if the worker gets a new job.

Participating employer

An employer that is using Nest by agreeing to our Employer Terms and Conditions.

Pay reference period

This is how often an employer pays its workers. For example, a pay reference period might be weekly, fortnightly, monthly or every four weeks.

Payment schedule

A schedule that shows the rates of contributions to be paid by an employer and their employees. It also shows the date the payments will be made by.

Pension reform

When Nest refers to pension reform, we mean the new duties for employers and the new rights for workers contained in the Pensions Act 2008.

Pensionable earnings

This is a term used by employers who choose a different way of working out the percentage of earnings to pay to Nest, rather than basing contributions on qualifying earnings. It describes the earnings on which the contributions are calculated according to the way the employer has chosen. This could include all income below £6,240 or above £50,000 in the 2020/21 tax year. The level is reviewed each year. Employers could also use only a part of their employees earnings, such as basic pay without overtime or bonus payments.

Pensions act 2008

The legislation that established the new employer duties. This means UK employers have to provide some or all of their employees with access to a workplace pension scheme that meets certain legal requirements. Employers will also have to auto enrol certain employees into a qualifying pension scheme and pay contributions on their behalf.

Public Corporation

An organisation set up by the government to run at arm’s length, Nest is a Public Corporation.


Qualifying earnings

The earnings band used to calculate minimum contributions. Qualifying earnings are currently those between £6,240 and £50,000 for the 2020/21 tax year. Employers can choose to base contributions on another definition of earnings if they want to.

Qualifying pension scheme

A workplace pension scheme that meets certain minimum standards.


Relief at source

The method of tax relief on contributions into members’ retirement pots that Nest uses.


This relates to what Nest Corporation asks employers that use Nest to do in order to run the scheme efficiently.

Retirement income

A retirement income is the money that a member receives after they've taken their money out of Nest and bought a retirement income product, which is also known as an annuity.

Retirement pot

A retirement pot is Nest’s name for a pension account. It includes the contributions from the employee and employer, any tax relief and the investment returns.

Retirement Tool

An online tool that members can use to find out more about their retirement options and to tell us how they want to take their money out of Nest when they retire.


This refers to the legal rules of Nest. They sit alongside the order and set out how Nest operates.


Scheme beneficiaries

This refers both to members of a pension scheme and their nominated beneficiaries.


A share in the ownership of a company. Companies sell shares to raise money to help their organisations grow. Once a share has been sold it can be resold on the stock market.

Sharia compliant

Something, such as a fund, that complies with Islamic law.

Single life annuity

An annuity that provides a retirement income for one person only and stops when that person dies.

Single person director

A single person director is someone who holds office as a director of a company and is the only worker in that company.

Sole scheme

A sole scheme is the only workplace pension provision offered by an employer. This could be Nest or another qualifying scheme.

State Pension

This is the amount of money you will receive from the government when you reach State Pension age.

State Pension age

This is the age when people normally start getting their State Pension. The State Pension age for women has gradually increased from age 60 to 65. This has bought it into line with the current State Pension age for men. From December 2018 the State Pension age for both men and women will gradually increase to reach age 66 by October 2020. The Government is planning further increases, which will raise the State Pension age from 66 to 67 between 2026 and 2028.

Statement of Investment Principles (SIP)

The document that sets out how a pension scheme will invest its members’ money.



The Pensions Regulator

Tax-registered pension scheme

For a pension scheme to qualify for tax relief it must be registered with HMRC for that purpose and comply with limits in the Finance Act 2004.

Tax relief

The money Nest claims from the government based on what members pay into their retirement pots and HMRC rules. The tax relief Nest reclaims is set at 20 per cent, which is the basic rate of tax. For higher rate tax payers additional tax tax relief can be reclaimed by the employee asking HMRC.

The Trustee

The Trustee of Nest is Nest Corporation. Nest Corporation is responsible for the scheme's governance and administration.



An employee without qualifying earnings. These employees won’t be automatically enrolled into their workplace pension but they can ask to be enrolled. Their employer won’t have to make a contribution for them, but can if they want to.

Working day

This refers to any day other than a Saturday, Sunday, bank holiday or public holiday.



Last updated: 03/20