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  • Home
  • About Us
    • Our Company
    • Our Team
    • How We Work
    • Client Charter
  • Services
    • Protection
      • Why Protection is Important
      • Life Assurance
      • Family Income Benefit
      • Income Protection
      • Private Medical Insurance
      • Critical Illness
    • Wealth Management
      • Introduction to Wealth Management
      • Relationship Management
      • Lasting Power of Attorney
      • Trust Information
      • Wills
    • Business Protection
      • Introduction to Business Protection
      • Key Person
      • Share Protection
      • Directors' & Staff Benefits
      • Income Protection
      • Relevant Life Cover
      • Employers' Liability
      • Professional Indemnity
    • Taxation
      • Introduction to Taxation
      • Capital Gains Tax
      • Income Tax
      • Inheritance Tax
    • Savings & Investments
      • Introduction to Savings & Investments
      • National Savings Products
      • Endowments
      • ISAs
      • Equities
      • Collectives
      • Unit Trusts
      • OEICs
      • Investment Trusts
      • Fixed Interest Investments
      • Capital Investment Bonds
      • Offshore Collectives
      • Junior ISAs
    • Pensions
      • Introduction to Pensions
      • Occupational Pensions / Auto Enrolment
      • Personal
      • Stakeholder
      • State Pension
      • SSAS
      • SIPP
      • Executive Pension Plan
      • National Employment Savings Trust (NEST)
      • Annuities
    • Financial Planning
      • Introduction to Financial Planning
    • Mortgages
      • Introduction To Mortgages
      • Mortgage Repayment
      • First Time Buyer
      • Remortgaging
      • Standard Variable Rate
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      • Offset Mortgages
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  • Give us a call on0141 332 2999or drop us a message!

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National Employment Savings Trust (NEST)

NEST — a defined contribution workplace pension scheme — was set up by the UK government to facilitate auto enrolment. As a ‘qualifying’ scheme, NEST can be used by any and all UK employers to make pension contributions. Employers can auto enrol employees in NEST rather than setting up their own pension scheme.

Members can transfer other Defined Contribution pensions they may have into their Nest scheme, should they wish, and are also free to transfer out to another pension scheme, providing they have stopped making contributions into the NEST account.

Although Auto Enrolment is compulsory, membership of NEST isn’t. NEST is, by design, a very simple scheme offering very few ‘bells and whistles’. Employers with more sophisticated requirements are free to consider establishing other types of workplace/occupational pension schemes.

Key considerations for employers:

1. Which type of scheme are you offering your staff?

Look at the advantages and disadvantages of other employer pension schemes when compared with the NEST scheme. Once you have analysed this, you can then decide which is more suitable for your organisation. A combination of two schemes may be the most appropriate approach initially, with staff eligibility for different schemes contributing to the solution; e.g. senior and employed staff being enrolled into an occupational scheme and contract staff being enrolled in NEST.

2. Work on your budgets

Employers have to contribute 3% of every employees’ ‘qualifying earnings’ to their occupational pension scheme, which will have a considerable impact on the costs of the business. If you offer a higher contribution rate, plan for the cost and long term implications of enrolling all staff on this basis. Look at whether you are making contributions on the full salary amount or band earnings. The key is to budget for these newly introduced measures, so that larger pension contributions do not make a sudden impact on costs. Employers may consider reviewing their total remuneration package in order to absorb these extra costs.

3. Review your current systems to make sure they can cope with the additional administration.

Can your payroll and HR systems cope with any extra administration? This is particularly relevant for any organisations that run both an occupational pension scheme and enrol some staff into the NEST system.

4. Effectively communicate these changes to your staff

Consider how you are communicating these changes to your staff. It is important to try and engage employees with their pension and get them to ‘buy-in’ to your company scheme. A pension scheme is viewed by many employees as an essential part of their benefits package, and when offered as part of the overall remuneration, can add tremendous perceived value to an organisation and the way it views its employees.

Organisations that provide pension schemes above the standard laid out by the government are likely to be a more attractive proposition for new and existing employees and demonstrate a commitment to their workforce.

Employers which offer schemes with contribution rates above the statutory minimum may be interested in applying for a pension quality mark to differentiate their scheme from others. (www.pensionqualitymark.org.uk)

Please contact us for further information and advice.

Nest is regulated by the pensions regulator

The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.

Tax treatment varies according to individual circumstances and is subject to change.

National Employment Savings Trust (NEST)

NEST — a defined contribution workplace pension scheme — was set up by the UK government to facilitate auto enrolment. As a ‘qualifying’ scheme, NEST can be used by any and all UK employers to make pension contributions. Employers can auto enrol employees in NEST rather than setting up their own pension scheme.

Members can transfer other Defined Contribution pensions they may have into their Nest scheme, should they wish, and are also free to transfer out to another pension scheme, providing they have stopped making contributions into the NEST account.

Although Auto Enrolment is compulsory, membership of NEST isn’t. NEST is, by design, a very simple scheme offering very few ‘bells and whistles’. Employers with more sophisticated requirements are free to consider establishing other types of workplace/occupational pension schemes.

Key considerations for employers:

1. Which type of scheme are you offering your staff?

Look at the advantages and disadvantages of other employer pension schemes when compared with the NEST scheme. Once you have analysed this, you can then decide which is more suitable for your organisation. A combination of two schemes may be the most appropriate approach initially, with staff eligibility for different schemes contributing to the solution; e.g. senior and employed staff being enrolled into an occupational scheme and contract staff being enrolled in NEST.

2. Work on your budgets

Employers have to contribute 3% of every employees’ ‘qualifying earnings’ to their occupational pension scheme, which will have a considerable impact on the costs of the business. If you offer a higher contribution rate, plan for the cost and long term implications of enrolling all staff on this basis. Look at whether you are making contributions on the full salary amount or band earnings. The key is to budget for these newly introduced measures, so that larger pension contributions do not make a sudden impact on costs. Employers may consider reviewing their total remuneration package in order to absorb these extra costs.

3. Review your current systems to make sure they can cope with the additional administration.

Can your payroll and HR systems cope with any extra administration? This is particularly relevant for any organisations that run both an occupational pension scheme and enrol some staff into the NEST system.

4. Effectively communicate these changes to your staff

Consider how you are communicating these changes to your staff. It is important to try and engage employees with their pension and get them to ‘buy-in’ to your company scheme. A pension scheme is viewed by many employees as an essential part of their benefits package, and when offered as part of the overall remuneration, can add tremendous perceived value to an organisation and the way it views its employees.

Organisations that provide pension schemes above the standard laid out by the government are likely to be a more attractive proposition for new and existing employees and demonstrate a commitment to their workforce.

Employers which offer schemes with contribution rates above the statutory minimum may be interested in applying for a pension quality mark to differentiate their scheme from others. (www.pensionqualitymark.org.uk)

Please contact us for further information and advice.

Nest is regulated by the pensions regulator

The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.

Tax treatment varies according to individual circumstances and is subject to change.

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Echo Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority and entered on the Financial Services Register (https://register.fca.org.uk/s) under reference: 943133.

Registered Address: 9 Fitzroy Place, Glasgow, G3 7RH.

Registration number: SC486212 Registered in: Scotland

The information contained within this site is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.

If you have a complaint about your adviser, or any financial advice you have received from your adviser, please contact us.

If you cannot settle your complaint with us, you may be entitled to refer it to the Financial Ombudsman Service (www.financial-ombudsman.org.uk)

 

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