McPhail slams CBI NEST claims

The Confederation for British Industry’s claim that NEST will be deserted by workers fleeing the 2% charge is “absolute rubbish”, Tom McPhail says.

In a statement released yesterday, the CBI claimed current proposals to ‘front load' contribution charges to pay for the set up of the scheme would leave savers worse off for more than a decade.

The business lobby group also said it was concerned about the structure of these fees - and warned many staff could quit the scheme should they think they were getting a raw deal.

CBI deputy director-general John Cridland said: "The next government needs to revisit the structure of these fees. We must make it easier for the low-paid to save by smoothing the cost, instead of front-loading it. The pensions timebomb is ticking loudly, and more people must be encouraged to save."

However, Hargreaves Lansdown head of pensions research McPhail accused the CBI of being divorced from reality - arguing that the average scheme member had "precious little understanding" of the minutiae of pension charges.

He also hit out at the business representatives claim that NEST was poor value compared with "a pension with significantly lower average charges".

"Let's ignore for a moment the logical absurdity of making such a statement and consider where investors are supposed to find such a pension? If such an option does exist, then it is keeping a remarkably low profile.

"By comparison with NEST, stakeholder is obscenely expensive. The people NEST is designed for are not currently being offered a low cost, top of the range company pension scheme - in fact most of the time they aren't being offered anything at all. Even with the 2% initial charge, NEST works out at the equivalent of 0.5% per annum and that is very good value."