Where am I? 
Home Pensions - Retail Personal Accounts
Categories: Personal Accounts
Topics: pension reform| NEST
The National Employment Savings Trust's (NEST) 2% contribution charge will be levied for 20 years, the Pensions Minister says.
The estimated time to recoup setup costs was revealed in a written question from Conservative pension spokesman, Nigel Waterson to Pension Minister Angela Eagle.
Earlier this month, the Department for Work and Pensions (DWP) revealed NEST will feature an annual management charge (AMC) of 0.3% and a temporary contribution charge of 2%.
The contribution charge was seen as controversial, and has been largely abandoned by the pensions industry.
Eagle said: The period in which the loan to NEST Corporation will be repaid will ultimately depend on a variety of factors, including the final costs of NEST and the size and nature of its membership.
"We anticipate that the total loan period, including the years in which NEST borrows from Government and the subsequent repayments, will last in the region of 20 years."
Paul Macro, a senior consultant at Towers Watson, says: "Psychologically, it may be very difficult for people to accept that £2 out of every £100 they save will be siphoned off to pay back a Government loan before it is even invested.
"While it's only those close to retirement who are likely to face overall charges on the scale that NEST was set up to avoid, the general communications challenge will be much wider."
| Share | |
| Comment | NEST 2% contribution charge to last 20 years |
More personal accounts news
Email alerts
Recommended reading
Categories
Topics
Comments
Related articles
Most Read
Audio / Visual
With the industry's biggest fund managers, IFAonline welcomes you to the media centre.
This year we have 14 awards designed to mark out the very best products in a highly competitive and innovative market. This includes three new awards for 2011 to reflect the developments in this rapidly growing market: Best Dual/Multi-Index Product, Best Structured (Oeic) Fund and Best Structured Product Provider.
Events
Poll
|
|
Job search
Ifaonlinejobs will open the right investment career path for you. Search hundreds of vacancies on www.ifaonlinejobs.co.uk now
In Focus
Transferring clients’ assets between organisations can be a major headache – often time...
Viewpoints
At the start of one of busiest times of year it is easy to think about all the obvious things...
sponsored by
this is going to be really good
Baffling I don't think I'd choose to invest in a scheme knowing that a portion of my money was going directly to a loan repayment. Baffling too that the rational for Stakeholder charging i.e. no entry fee has been abandoned without explanation and replaced by a 2% entry fee with a non customer focused rationale. So we pay 2% to get into a scheme. We don't yet know what we are being offered by way of administration-it seems very unlikley indeed that it will be of a high standard-there is only one firm willing to do it and it will be carried out outside the UK. We don't know what to expect by way of fund choice or standard of management. We don't know what standard to expect in providing information or advice at retirement and flaw of flaws once we have put our money in it we are not going to be allowed to transfer to another provider prior to taking benefits. We don't even know whther the NEST arrangement will be subject to the same rules be they favourable to the member or not, as are mainstream ppp's. A must to avoid I would say and in fact not too hard to match in the private, commercial sector. I'm looking forward to it immensely
Posted by: snooks