What is NEST?

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The National Employment Savings Trust (NEST) is a defined contribution workplace pension scheme set up by the UK government to support auto-enrolment. NEST provides one pension pot per person, ensuring a simple, cost-effective, easy-to-track pension scheme for individuals who might subsequently change their job or stop working altogether. Although NEST used to cap the amount of money that a member could save into their pot, these restrictions were removed in April 2017, allowing workers to save as much as they like.  

Any UK company can choose to use NEST to help them meet their new obligations. An employer can use NEST as its only workplace pension scheme or alongside another scheme. If NEST is unsuitable for the entire workforce, the employer can choose to use NEST for one group of employees and another pension scheme for employees who fall within a different category. 

NEST members can choose from a total of six funds in which to invest their pension pot. Retirement Date Funds target the year in which the saver expects to withdraw their money, and NEST also offers Ethical, Higher Risk, Lower Growth, Pre-retirement, and Sharia options. However, the majority of members are expected to opt for the default-option Retirement Date Funds. NEST’s charges are relatively low, comprising an annual management charge of 0.3%, and a charge of 1.8% for each contribution. At present, NEST is available free of charge for any UK employer who wants to use it. 

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