From October 2012 the UK Government will introduce a new pension scheme to the UK as part of a bigger overall pensions reform strategy. Previously known as “personal accounts” or “personal account pensions”, pensions minister Angela Eagle announced the new brand – The National Employment Savings Trust or NEST on 7 January 2010.
The full proposals include reforming the UK State Pension to make it simpler and more generous as well as formally extending people’s working lives.
The Government estimates that about seven million people are currently under saving for retirement and a major part of the reform is the Government’s ideas for making it easier for these people to save for retirement. The proposals will have wide ranging effects across every field of UK business as the onus will be put on employers to help encourage more people to save:
- From October 2012 UK employers will be required to automatically enrol employees into a ‘qualifying workplace pension scheme’. This auto enrolment could be to your existing company pension scheme if it meets certain criteria. If it does not meet the criteria or if you do not operate a company pension scheme then your employees will be enrolled into NEST, a simple, low-cost pension scheme being introduced by the Government.
- Between October 2012 and 2017, depending on the size of company, all UK employers will be required to contribute a minimum of 3% of each employee’s eligible earnings into a pension, assuming the employee does not “opt out”. This is intended to incentivise them to start saving towards their retirement. Employees will need to pay a personal contribution of 4% with a further 1% tax relief being added to make the minimum contribution 8%.
This leaves UK employers with a pivotal role and the Government is proposing key measures designed to minimise the burden on them:
- Compulsory employer and employee contributions will be phased in.
- Simple, straightforward, qualifying criteria for existing Company Pension Schemes, meaning many existing schemes will meet them, perhaps with minor changes.
- A ‘light-touch’ but effective compliance regime for new employer duties such as automatic enrolment.
This page is designed to provide UK Employers with a guide to the National Employment Savings Trust (NEST or Nest Pensions) and information on how the introduction of the NEST pension will fit in with the overall UK pension Reform strategy planned for 2012. We are also pleased to provide initial consultation and if necessary personalised advice and strategies for employers to address their NEST obligations. If you would like to take advantage of this service please complete the contact us section.