NEST stands for the National Employment Savings Trust and is a simple pension scheme to help employers comply with the Pensions reforms which are being phased in from 2012.   It is predominantly aimed as the lower income employees who want a competitively charged pension, but will have little in the way of investment fund  choice (maybe 4 or 5)  At the moment the maximum contributions are £350 per month or £4,200 per annum.

Why is it being introduced?  Well because as a nation we have little in the way of pensions savings and this needs to be addressed for 100,000’s of people.  Stakeholder pension schemes were supposed to address this issue – but they did not work!

So as an Employer or Employee will I have to join NEST? Well no, as long as you comply by having your own Pension Scheme.  But there is strict compliance rules which are coming into place with heavy fines (£5,000) for Employers who miss the various Opt in, Opt out deadlines for their Employees!

As I’ve said, Stakeholder failed and the government need to take decisive action!  The percentages will be phased in but ultimately the employer will be contributing up to 4% of the members salary and the Employee will be contributing 5% (gross).

The work that we are doing at the moment is by helping small employers encourage their employees into putting away this money for their retirement.  We talk them through the commitments of the Employer and find the best possible scheme for their circumstances.  One of the main factors for Employers is ease of use and we help source companies which have a robust web based software proposition to help with this.

We can help them with salary sacrifice where the employee sacrifices part of his salary and can save valuable Tax and National Insurance Contributions to either increase the employees net pay, boost his monthly pension or both.

As ever its about the right financial planning to maximise tax efficiency and growth, like our little friend below is trying to do!  Stop sweating and let us help you through the process.