‘NEST’ is the new brand name for the recent Government pension reforms, previously/generically known as Personal Accounts. Much of the detail remains subject to change and is yet to become legislation; below is what we know so far*.Background to pension reform:

• Population projections suggest that the number of people aged 65 and over will almost double by 2055. The Department for Work and Pensions (DWP) estimates that around seven million people are not saving enough to deliver the pension income they are likely to want, or expect, in retirement.
• In its 2005 report to government, the Pensions Commission called for wider and fairer pension coverage. It also identified automatic enrolment into a workplace pension scheme and employer contributions as key factors in effectively tackling under-saving. In response to the Pensions Commission’s recommendations, the Government is implementing an integrated package of reforms from 2012.
• Whether you are an adviser, employer, or employee, the reforms are likely to affect you.

The Personal Accounts Delivery Authority (PADA), who is responsible for the development and delivery of personal accounts, has produced the following ‘15 Key Facts about Workplace Pension Reform’:

1. The Pensions Act 2007 reformed state pensions and introduced arrangements to increase the state pension age. The Pensions Act 2008 reforms workplace pension provision.
2. The reforms aim to make saving for retirement the norm.
3. The workplace pension reforms mean that from 2012, employers will have to put eligible workers into a scheme which meets certain criteria and make minimum contributions. This is called auto-enrolment.
4. Auto-enrolment is being designed to overcome the inertia which currently prevents many people from saving and to make it easy for individuals to save in pensions.
5. Workers will be able to choose to opt out of their employer’s scheme if they believe pension saving is not appropriate for them.
6. Employers will have to contribute a minimum of 3 per cent on a band of earnings, although they can contribute more than this. The total minimum contribution for eligible workers must be 8 per cent of the band of earnings. This is made up of employer contributions, worker contributions and tax relief.
7. Contributions will be phased in, starting at 1 per cent and increasing gradually to the minimum level to help employers and employees adjust to costs.
8. The employer duties and how they will be implemented will be specified by secondary legislation. The reforms will be introduced in stages from 2012, with some employers affected before others.
9. Three parties will work together to implement the new reforms: DWP, The Pensions Regulator and PADA.
10. DWP is responsible for co-ordinating activity for the reform programme, including agreeing policy with ministers and overseeing delivery.
11. The Pensions Regulator is the UK regulator of work-based pension schemes and is an existing non-departmental public body (NDPB).
12. The Pensions Regulator’s role in the reforms is to maximise compliance with the employer duties set out in the Pensions Act 2008 and to ensure certain safeguards protecting employees are adhered to. It will provide information to employers on how to fulfill their duties and guidance on good standards of pension scheme administration.
13. PADA is a new public body specifically established under the Pensions Act 2007 to help implement the reforms. PADA is designing and introducing the infrastructure for the personal accounts pension scheme.
14. The personal accounts scheme will be a national low-charge independent workplace pension scheme that any employer can use for auto-enrolment. It aims to provide access to workplace saving to millions of people who currently don’t have access to a workplace pension – typically those on low-to-moderate incomes.
15. Employers can choose the personal accounts scheme or another qualifying workplace pension to meet their 2012 auto-enrolment duties.

* = Information provided by the DWP, The Pensions Regulator and the Personal Accounts Delivery Authority. For further information about Government policy, contact the DWP at: www.dwp.gov.uk. For further information about compliance with the employer duties contact the Pensions Regulator at: www.thepensionsregulator.gov.uk