The National Employment Savings Trust (NEST) was set up by the government more than a decade ago. It was to make sure every employee had access to a qualifying workplace pension scheme (QWPS). NEST was also set up to comply with the Auto-Enrolment legislation.
NEST was initially designed to be the last resort for smaller employers who couldn’t find an alternative pension provider. However, today a great number of SMEs still use it.
But is NEST the best option for you and your employees? Here are some of the biggest drawbacks with NEST:
NEST was initially set up as a low-cost workplace pension scheme. However, now NEST pension charges are actually more expensive than some of its competitors.
Using Salary Exchange (also known as Salary Sacrifice) by engaging with a pension and benefits consultant such as Corinthian, can give significant savings – around £1,500 per annum for just 12 members.
 Each with average salary of £30,000 paying 3% with a 13.8% NI saving
Unlike other pension providers, the NEST pension scheme can be subject to inheritance tax upon a member’s death.
NEST pays its death benefits directly to a member's estate. This means that the money could diminish by as much as 40% before it reaches the next of kin. Although the government have been heavily criticised for this, there are no immediate plans to change this policy.
With pension contributions increasing in April 2018 and again in April 2019, there’s a greater need to ensure that your pension provider can continue to work for you and your employees.
As their contributions increase, your employees will want to know more about the workplace pension scheme your company has chosen. They will want more transparency and the freedom to choose how their pension pot is invested. Likewise, employers may want to get more return for their benefit spend once they’re paying 2% and then 3%.
However, NEST won’t provide this level of support.
The average employee will change their job seven times before they retire. However, originally the government prevented NEST pension transfers in and out of the scheme. This makes it difficult for employees to consolidate their pension pots.
The government have since reversed this decision. As of April 2018, NEST members will be allowed to transfer their pensions. If you currently have a NEST pension, speak to a Corinthian Pension Advisor and we’ll be happy to help you.
It’s important to remember that NEST is just a pension scheme. Here at Corinthian, we recognise circumstances change and your employees need a pension scheme which can evolve along with it. We provide an added value service to employers and their employees. And given the savings they would make utilising salary exchange, might be at very little additional cost, if any.
Get in touch today to find out how we could help you and how much money we could save you.
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