Master or super trusts and NEST

Master or super trusts such as the National Employment Saving Trust (NEST), The People’s Pension, Super Trust and other organisations (usually insurance companies) provide multi-employer pension schemes promising low charges, flexibility, and help with auto- enrolment.

The NEST scheme, for example, is a trust-based defined contribution occupational pension scheme run in the interests of members by the NEST Corporation, a not-for-profit non-departmental public body, regulated by the Pensions Regulator. The scheme has a public service obligation, which means it cannot reasonably decline to provide a scheme for an employer.

Launched to help employers provide low-cost, independent workplace pensions, and designed as an online scheme for low to moderately paid employees (which can be extended to an entire workforce) NEST aims to be easy to administer, providing members/employees with one retirement pot that can travel with them from job to job through their working life. Employees who join NEST will be able to continue to save ! in the scheme even after they leave the workplace or move to an employer that does not use NEST.

How NEST is funded – and what it can cost

As with other master or super trusts, NEST is funded by an annual management charge from its members (i.e. NEST pension holders) currently 0.3% of a member’s total fund for each year. There is also a percentage charge for each new contribution to a member’s retirement pot of 1.8%, so £98.20 from each £100 goes into the pension pot. Where an employee is automatically enrolled in NEST or a defined contribution scheme the employer must pay a minimum of 3% of the total minimum contribution of 8% of earnings. There are phasing-in arrangements, see page 264. If an employer pays the minimum 3% – although they can pay more – the employee will pay 4%, with 1% paid by the government as tax relief.