Nest, the pension scheme established by the government, has pledged it will not join the ranks of the People’s Pension and Now: Pensions in adding an AE charge for employers.
Gavin Perera-Betts, executive director of product and marketing at Nest, said: “We have no plans to introduce a charge for employers to use Nest, and it will continue to be a low-cost scheme for members. Nest was established under the Pensions Act 2008 to ensure that a good-quality qualifying scheme was available to any employer that needed to use one.”
This follows the People’s Pension announcement that it will charge employers for setting up AE schemes. Businesses working directly with the master trust will pay £500 plus VAT, while employers working through an adviser will pay £300 plus VAT.
The new charge will be applied once the scheme is set up, and there will be no exit charge if employers decide to switch providers.
Now: Pensions announced in September it would be making the charge from January 2016, which will be up to £40 a month.
Adviser view
Tom Binstead, executive consultant at Gloucestershire-based Kelland, said: “It was inevitable that master trusts would start making a charge, and it’s a shame that the only one left not charging is Nest, as it is not viewed as attractive.
“We do search the market for other schemes and we do look for providers, but this is going to cause employers to pay more – so another cost on auto-enrolment. Traditional providers charge similarly, so as an adviser you would prefer to use traditional providers rather than the People’s Pension if costs are the same.”
