Pension Personal Accounts – NEST charging structure unveiled

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The Government has announced the expected charging structure for the National Employment Savings Trust (NEST).  In the long term, the annual management charge is expected to be 0.3% of the value of the fund.  In the short term, however, to meet the costs of establishing the scheme, the initial level of charges will also include a 2% additional charge on contributions.  The Government will make a loan to NEST to cover the gap between revenues and the initial set-up costs.

The Government describes these arrangements as a “fair and sensible funding package” and an example of how “NEST can deliver low charges to its members without putting a burden on taxpayers”.

In contrast, a Timesonline article described “outside experts” commenting that NEST “could be an expensive way of saving for some people and that many would be deterred by upfront charges that might actually shrink their savings pots in the early years”.  It is estimated that the 2% additional charge could be in place for between 10 and 20 years.

Further information:

NEST charging structure unveiled

PADA responds to Government’s announcement on funding and charging structure for NEST

Briefing note: Why does the proposed combination charge for NEST meet its low charge objective?

Low earners to lose chunk of pension savings from word go

This entry was posted on Thursday, March 25th, 2010 at 10:00 and is filed under Pensions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.