800,000 firms gear up for AE
This year the Pensions Regulator estimates that there could be as many as 800,000 employers due to meet their auto-enrolment duties. That is about a 50% increase on last year and could mean up to 2,000 employers setting up a scheme every single day.
There will be lots of different things to consider when the new wave of employers set about choosing their scheme: ease of use, investment performance and employer charges. While many pension providers charge employers, you might be surprised to hear that NEST does not.
NEST was set up in 2008 with a public service obligation to accept any employer that wants to use it to meet its duties. That is because the government has decided it cannot require all employers to set up a scheme if it cannot guarantee that there will be a scheme for them to use.
Paul Budgen, director of development at NEST, said: “We believe that implementing an employer charge is at odds with our obligation. We do not believe that we can be available to all and help employers to meet their duties if we have a charge.
“What employers do instead of paying to use NEST is up to them. Some decide to use the money to pay for specialist support from an IFA, accountant or payroll provider. Others do not. And of course some employers choose a scheme where there is an employer charge. Each employer can find something that works for them.
“The important thing is that employers have that choice and there is an obstacle free way to become auto-enrolment compliant.”