By Lois Avery
A new national workplace pension scheme will roll out next year as part of government plans to ensure all employers offer a pension to staff by 2016.
The introduction of the National Employment Savings Trust (NEST) will mean that between four million and eight million workers will start to save in a pension scheme for the first time.
The government hope that NEST will serve as an alternative for for smaller businesses and employees that struggle to afford the cost of the bigger privately-run pension schemes.
The announcement that NEST will go ahead was made by pensions minister Steve Webb, after a review of the scheme.
But now the coalition has adopted the plans it will mean all workers earning £7,475 or more will be automatically enrolled on to the NEST pension.
Webb said that NEST would “end decades of decline of membership in workplace pension schemes".
The news has been received positively by much of the pension industry, who will have been concerned to see recent figures revealing a fall in the number of people enrolled in employee schemes last year. However, there are still critics.
George Ladds, head of investment and pension research at Fair Investment Company warns that NEST could offer savers a second rate option.
“I have concerns with NEST. I think for NEST Corporation to be able to afford to run the scheme, it is bound to have a limited fund choice and therefore offer poorer value for money compared with other pensions.”
Although he did say the general idea was a positive move, Ladds added: “I have long argued in favour of combining pensions and ISAs and still feel this is the best solution.”
