Nest charging structure revealed

The government has announced the charging structure for the national employment savings trust (Nest).

The scheme will initially have a combination charge made up of an annual management charge (AMC) and a small contribution charge.

The annual management charge is expected to be set at 0.3%, reflecting the long-term running costs of operating the scheme, with a contribution charge of around 2% until the costs of establishing the scheme have been met.

Nest chairman designate Lawrence Churchill said: “I welcome the government’s announcement. It demonstrates how Nest can deliver low charges to its members without putting a burden on taxpayers.”

Brendan Barber, general secretary of the Trades Union Congress (TUC), added: “The charging structure strikes exactly the right balance. A contribution charge provides a sensible initial income stream that will help defray start-up costs. In the longer term, savers will have the stability of an industry-standard annual management charge, set at an extremely competitive level.

“There are inevitable start-up costs for a major project such as Nest. The staging and phasing of contributions and auto-enrolment – over a longer period than we would like – will delay the full flow of scheme income. While this has made some upfront charging inevitable, the aim should be to reduce this as soon as possible. 

“The scheme’s initial savers should not have to bear the costs of the Government’s decision to put off the date when members and employers make full contributions.

“In the longer term, the 0.3% annual management charge is exactly what is needed for the target group of low to average earners.”

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