Personal Accounts (NEST)
Personal Accounts are the Governments latest attempt to plug the shortfall in UK pension savings. Personal Accounts were renamed NEST (National Employment Savings Trust) in January 2010.
A lot of the detail is still to be finalised, but in simple terms, the legislation means that all employees will be auto-enrolled in to a work place pension scheme from 2012 onwards.
The new employer responsibilities are built on two principles:
- the auto-enrolment of working individuals into a pension scheme, and
- compulsory pension contributions by employers and employees
Auto-enrolment means that an individual is automatically enrolled into a pension scheme and doesn't need to do anything or make any decisions, for example choose a fund or sign an application form.
Employers can choose to auto-enrol jobholders into a qualifying auto-enrolment private pension scheme or into the government's scheme (NEST).
The total minimum pension contribution that needs to be paid into a scheme is 8% of qualifying earnings (band earnings up to a maximum amount), with the employer needing to contribute at least 3%. Please note that qualifying earnings is different from how most employers currently calculate pensionable earnings, as it includes ALL earnings not just basic pay.
Employees will be able to opt out of the scheme, but if they do, they will need to be re-enrolled in to the scheme every 3 years.
Please see useful links for further information from the Personal Accounts Delivery Authority
To discuss further please contact us
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