Nest the right place for smaller employers

nest_golden_egg_410The UK government's National Employment Savings Trust (Nest) will be the right choice for smaller employers rather than insurance companies offering work-based pensions, said a senior pension consultant.

The Pension Regulator launched a discussion paper about Nest last week. Lee Hollingworth, head of DC at Hymans Robertson, a UK pensions and investments adviser, said: “This review highlights an issue for the mainstream pension providers, ie. that Nest will be the right choice for many smaller employers. To survive these providers have a short-term window to engage with larger employers who are currently reviewing their pension arrangements leading up to auto-enrolment in 2012.”

The discussion document questions whether smaller employers would be better off using the Nest rather than the schemes from pension providers such as insurers.

“As a result of auto-enrolment they will find themselves with over a million new clients in the shape of smaller employers, who will require a heavy hand to ensure they comply with the complexity of these regulations,” said Hollingworth.

He added: “The DC industry has long needed a wholesale review of the regulatory structure. It is a nonsense that contract based plans are the responsibility of the FSA and trust based schemes the pensions regulator. These two have to find an effective way of working together that is to the benefit of DC members.”

©2011 funds europe