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National Employment Savings Trust: A Guide To The

The document provides information about the National Employment Savings Trust (NEST), a new national pension scheme in the UK. NEST will help an estimated 7 million employees who are not currently saving for retirement to start saving. Employers will be required to automatically enroll eligible workers into a qualifying pension scheme starting in 2012. The minimum contributions to NEST will rise gradually to 8% total by 2017.

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64 views4 pages

National Employment Savings Trust: A Guide To The

The document provides information about the National Employment Savings Trust (NEST), a new national pension scheme in the UK. NEST will help an estimated 7 million employees who are not currently saving for retirement to start saving. Employers will be required to automatically enroll eligible workers into a qualifying pension scheme starting in 2012. The minimum contributions to NEST will rise gradually to 8% total by 2017.

Uploaded by

skyreach
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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National Employment Savings Trust

A Guide to the

Helping an estimated seven million employees who are not putting money aside for their retirement to start saving for tomorrow, today

A Guide to the National Employment Savings Trust

National Employment Savings Trust


Helping an estimated seven million employees who are not putting money aside for their retirement to start saving for tomorrow, today
More than half of employees are not aware that they could be automatically enrolled into a new national pension scheme called the National Employment Savings Trust (NEST), with many likely to be surprised when employers start taking deductions from their pay, research from HSBC has found.
Employers can start using NEST from 2011 if they want to. However, they wont be required by law to enrol workers into a qualifying pension scheme until 2012 at the earliest. NEST is being introduced by the government to help people save more for their retirement. Employees will have one NEST retirement fund for life, whether they change jobs, work for more than one employer at the same time, or leave employment. Large employers will have to comply with the new workplace pension duties first, with medium and smaller employers having to comply over the following few years. workplace pension scheme. Employees will be auto-enrolled by their employers but they will be given the option to opt out. However, employees should think very carefully before they do. The employees money as well as contributions from their employer and any tax relief from the government can be invested in different types of financial products such as company shares, property or loans to governments that pay interest. The overall minimum contribution will rise gradually to 8 per cent by 2017, of which the employer will need to pay 3 per cent. The employee will have to pay 5 per cent (with 1 per cent of this coming from tax relief).

New auto-enrolment
The new auto-enrolment obligations will affect employers of all sizes and will be phased in between 2012 and 2016. Employers will have responsibility for paying contributions into a pension both from them and the employees as well as communicating with staff and ensuring the pension scheme is compliant. An employees partner or other third party can also pay contributions into NEST on their behalf. These payments will count towards the employees annual contribution limit. The annual contribution limit is the maximum that can be added to the employees retirement fund in one year. This includes contributions from them and their employer as well as tax relief from the government. The amount is currently 4,200 for the 2011/12 tax

Minimum NEST contributions


Initially the minimum NEST contribution will be 2 per cent of an employees qualifying earnings. Of this, the employer will need to pay at least 1 per cent, though they can pay more if they want to.

Option to opt out


NEST will involve employees who are not already a member of a recognised

A Guide to the National Employment Savings Trust

A Guide to the National Employment Savings Trust

year. This figure is adjusted annually in line with average earnings.

NEST charges
Employees will pay a small percentage charge of each new contribution that goes into their retirement fund. n  T his contribution charge is set at 1.8 per cent, so from a contribution of 100, 98.20 goes into the employees fund. There is also an annual  management charge (AMC) of 0.3 per cent of the total fund each year. n

Taking money out


Transfers in and out of NEST are not allowed (except in specific limited circumstances); however this will be reviewed in 2017. Employees may be able to take their money out of NEST before they are aged 55 if they become ill and if they are seriously ill, they may be able to take their entire fund as tax-free cash. If the employee dies prematurely prior to retirement their retirement fund will normally be given to the person or number of people they want to receive it. The beneficiarys details are provided on joining NEST.

The aim is for the new auto-enrolment obligations is to help an estimated seven million employees who are not putting money aside for their retirement to start saving for tomorrow, today. For information about NEST, please contact us to discuss your requirements.

Employers can start using NEST from 2011 if they want to. However, they wont be required by law to enrol workers into a qualifying pension scheme until 2012 at the earliest.

A Guide to the National Employment Savings Trust

National Employment Savings Trust is regulated by the Pensions Regulator. Content featured is for your general information and use only and is not intended to address your particular requirements. It should not be relied upon in its entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. The pension and tax rules are subject to change by the government. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. The value of fund units can go down as well as up and investment growth is not guaranteed. Published by Goldmine Media Limited, Prudence Place, Luton, Bedfordshire, LU2 9PE
Articles are copyright protected by Goldmine Media Limited 2011. Unauthorised duplication or distribution is strictly forbidden.

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