-- Employers ignoring NEST pension scheme --


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The Government's new workplace pension scheme called NEST (National Employment Savings Trust) is proving a massive flop with only 2 per cent of employers planning to use the new scheme, according to a new survey.

From October 2012 larger employers will be required to automatically enrol staff into a pension with all companies gradually phased into this scheme over the next four years.

The Government has set up NEST for firms that don't currently have access to a pension scheme. But this survey by consultants Aon Hewitt suggests the vast majority of firms will use alternative pension arrangements instead.

James Pattern, of Aon Hewitt said: "It seems that where possible many companies prefer to use existing vehicles to limit the amount of change required."

But this survey also suggested companies looking to minimise change, won't "level down" existing pension contributions to meet the new minimum rates set out by the Government. This will see employers contribute 3 per cent of salary, Government 1 per cent and employees 4 per cent of salary – unless the employee opts out of this scheme.

Mr Pattern said that sticking to existing contribution levels would reduce the workload firms faced moving to auto-enrolment, but would increase their costs.

If a significant number of firm shun the new Nest scheme, this could give the pension scheme funding issues. An additional flat rate charge will be levied on early joiners to cover start-up costs. This will disappear once these costs have been met, but if take-up is slower than expected this charge could remains for 20-years or more.

NEST chief executive Tim Jones said the scheme was already working with more than 100 employers who had signed up to a pilot run of the new scheme and feedback from employers and members had been positive.

He added: "We expect to have between two million and five million members by the end of staging and to work with hundreds of thousands of employers. While research like this is always of interest, it doesn't reflect our current experiences with employers."

Source: AON Hewitt

For bespoke pension advice on Auto Enrolment contact Credencis.

We are situated near to derby and Nottingham and visit clients nationwide.

Credencis

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Views expressed by our author, are the personal views of the author alone, and are not intended in anyway to be construed as advice.They should only be used as guidance and are not necessarily suited to the personal circumstances of every individual in the UK.If you are interested in seeking advice further then please contact Credencis direct.