Danish NEST rival reveals £1.50 per month charges

Danish pension scheme ATP has revealed the details of NOW Pensions, the multi-employer trust it said can rival the National Employment Savings Trust (NEST).

NOW claimed 95% of pension scheme members choose the scheme's default investment strategy, justifying its decision to offer just one.

The strategy will be based on a managed diversified growth fund, a retirement protection fund and a cash protection fund.

The trust will charge each member £1.50 per month for administration, plus a 0.3% annual product investment charge.

NOW also claims its accompanying software will make it easy for employers to administrate alongside its payroll and human resources systems.

Morten Nilsson, chief executive of NOW, pictured, said: "We believe auto-enrolment is a wake up call to the UK pensions industry, and ATP's experience in servicing virtually the entire Danish working population and proven track record shows there is another way.

"By diversifying investments and remaining agile in the markets, ATP has optimised members' returns in any economic climate.

"ATP's results have beaten the Danish standard by more than 2% on average over the past decade by returning 7.4% per year."

NOW will place members in the managed diversified growth fund during the accumulation phase of their saving career.

Members can then choose to move gradually into the retirement protection fund, which has a return target based on annuity prices, or the cash protection fund as they approach retirement.

Tom McPhail, head of pensions research at Hargreaves Lansdown, said: "There is still no indication of how NOW can hope to displace NEST as the default choice of low cost, simple pension scheme for employers that do not want to use any of the existing pension industry solutions.

"Without an active distribution strategy to ensure that employers choose NOW ahead of any other scheme, it is hard to see how they will succeed in bringing in any members."

McPhail said the scheme's single investment strategy will present problems for employee who want Sharia or ethical funds, and added the charges for NOW are roughly the same as those for NEST.

ATP pulled out of the running to provide the administration for personal accounts, the forerunner to NEST, in October 2009.

Other providers have created pension products they believe will rival NEST.

Institutional investment adviser Dean Wetton launched Pension Umbrella Trust in September, and Standard Life announced it would extend its own master trust offering in preparation for auto-enrolment.