Independent Trustee Company Blog

Showing posts with label UK Government. Show all posts
Showing posts with label UK Government. Show all posts

Monday, June 11, 2012

NEST: Protecting their young?

The UK government is making changes to encourage people to save for retirement. The Pensions Act 2008 introduced new duties on employers to provide access to a workplace pension scheme. All employees will be automatically enrolled into an occupational pension (unless they opt out) and where employers do not already have a scheme, people’s money will be invested in NEST. NEST (National Employment Savings Trust) will be a universal, defined contribution scheme, accumulating a fund during a workers life to purchase an annuity on retirement.  It is due to commence in October 2012.

UK NEST
Much scrutiny has been given to the investment choices that NEST will make available to their members. When it comes to the funds that NEST invests their members in in the early years this differs substantially to what is typically used in standard Defined Contribution Lifestyle funds in Ireland. 

NEST carried out extensive research and consultation and as a result they found that when it comes to younger members- those under 30- that they’re especially sensitive to volatility and loss and are most likely to act adversely in the face of such volatility.  NEST will invest younger members- in their 20’s - initially in funds that will target investment returns that look to match inflation after all charges have been taken out.  The next phase where members will spend the majority of their time circa 30 years, will target returns of inflation plus 3% after charges, the final stage is designed to manage the risk of shocks closer to retirement.


Niamh Quirke