NEST Pension Scheme – Scheme approved by European Commission under EU State aid rulesTuesday, July 13th, 2010
On 6 July 2010 the European Commission announced that the NEST pension scheme, part of the Government’s plans to introduce automatic enrolment pension personal accounts in 2012, has been approved under EU State aid rules.
The scheme was notified to the Commission because of a loan granted by the Government to fill the funding gap faced during the early years of the operation of NEST.
The Government will hand out the loan at a commercial interest rate. However, NEST will only have to pay the interest corresponding to the Government’s cost of borrowing. Under the EU state aid rules, this difference is considered to be a soft loan and to constitute state aid. The amount of aid, depending on the number of members, will be in the range of £200-379 million. However, the Commission concluded that the aid would not overcompensate NEST for providing the public service and was therefore compatible with EU state aid rules.