Personal Accounts Renamed National Employment Savings Trust

The Personal Accounts Delivery Authority has revealed the pension saving scheme is to be rebranded the National Employment Savings Trust. The working title “personal accounts” will be replaced by Nest as the consumer-facing brand for the pension saving scheme targeting low to moderate earners. Pada says the cost of the rebranding excercise, including the research undertaken to come up with the name is £363,000.

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Nest will be run by the Nest Corporation, a not-for-profit trustee corporation, and will have its own website. The scheme will launch in low volumes in 2011. Acting Pada chair Jeannie Drake says: “The reforms to UK workplace pensions, including Nest, represent a consensus settlement reached across industry, political parties and interest groups. We all have one goal in mind - to make saving for retirement become the norm and to put an end to poverty in old age.”

Minister of state for pension reform Angela Eagle says: “This Government’s radical reforms to the pensions system will ensure millions of workers on low and moderate incomes are able to save for their retirement in a workplace pension with a new guaranteed minimum contribution from their employer. Nest will play a key role in this and help transform attitudes to saving.”

Facts & Figures Managing director Simon Webster was scathing about the changes. "Personal Accounts were a poorlyt thgouth idea whwen they started. When will these stupid policiticians learn. Name changes make no difference. Ten years ago stakeholder was going to be the answer to low levels of UK retirement funding. It was going to work, we were told, because it was cheap. Now they have produced something else cheap but no advice is available, and there has been total mismanagement, confusion and delay - so it too will fail. Meanwhierl the retirement aspirations of millions could be irreperably damaged.

In any event don’t wait for your employer or the Government to take the initiative, start saving for retirement today.”

Independent pensions consultant Ros Altman, a former adviser to the Government on pensions policy, warns changing the name of Personal Accounts will not make them work any better and she is equally unimpressed. She says,

"NESTs are only continuing bcause they offer short term benefits to powerful vested interest groups with no regard for workers. Politicians will claim credit for getting more people to save in a pension. Employers will cut costs by cutting pension contributions back to the 3% minimum. The Treasury will save money on future means-tested benefits and financial companies will earn fees on managing the money each year. Indeed by ploughing ahead with this project, regardless of the risks to the lower and middle earners they are aimed at, the Government is continuing to ignore the dangers of forcing workers into a pension arrangement that may not be suitable for them," she says.

Future means-testing, investment and annuity risks, levelling down, and cut-backs in existing pension coverage as a result of NESTs are "serious threats to future pension outcomes which both the Government and the pensions industry are choosing to ignore", she says. She gives the example of a worker earning £20,000 a year putting £50 a month into their NEST under the assumption this guarantees their future security is taken care of. "The amount workers will be required to put into their pensions will not deliver much of an investment return. These people could discover, but not for many years, that their NEST merely replaced the means-tested state benefits they would otherwise have received."

She says "Unless the scheme is abandoned immediately, Britain will end up paying for its failures for generations to come. If we do not abandon this project soon, we will waste even more money on a pension savings scheme not fit for purpose. If the Government is not honest about the risks then future taxpayers may end up funding compensation claims from workers who will explain how the Government misled them about the value and security of their pension savings."