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Auto enrolment pension charges unveiled

Auto enrolment pension charges unveiled

Category: Pensions

Updated: 16/03/2010
First Published: 16/03/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The Government has set out the expected charges for National Employment Savings Trust (NEST) which will give millions the chance to save for retirement.

From 2012, employees not offered a pension scheme by their employers will be automatically enrolled onto a low cost initiative, which is estimated to have between three and six million members.

Once enrolled, employees will have to opt out if they do not want to be part of a pension scheme.

Today, it was announced that the scheme will include an anticipated 0.3 per cent annual management charge over the long term. This compares favourably with a number of personal pension plans, which can charge up to one per cent.

An additional two per cent charge on contributions will be implemented to cover the cost of establishing the scheme.

"These charges demonstrate the Government's desire to ensure that NEST provides a low cost means of saving for retirement," said Richard Eagling, Editor of Investment Life & Pensions Moneyfacts.

"Although the scheme will initially involve a dual charging structure once the costs of establishing the scheme have been met the contribution charge will be removed."

The Government also pledged to provide money in the form of a loan to NEST to make up the shortfall of costs and revenues until the initiative is completely established

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