CBI: Complicated Nest scheme could deter savers

Tuesday, April 20th 2010

A new government workplace pension scheme may discourage workers from putting money aside for retirement, according to the Confederation of British Industry (CBI)

The organisation noted that the National Employment Savings Trust (Nest) may deter people due to its planned charging structure, which sees individuals paying more heavily in the early years.

John Cridland, director-general of the CBI, commented that many personnel will feel they are receiving a "raw deal" regarding the initiative.

"We must make it easier for the low paid to save by smoothing the cost, instead of front-loading it," he said, adding: "The pensions timebomb is ticking loudly."

Under Nest, members will start by paying in two per cent of their contributions, with an additional 0.3 per cent annual management charge.

The CBI, which considers itself the UK's premier lobbying body, stated calculations prove that the scheme is a more cost-effective option in the long run, but it aired concerns that employees may only see the short-term drawbacks.