Large numbers of people in the UK, especially in the private sector, are not setting aside enough money for their retirement. This is not a new problem and Governments down the years have introduced various initiatives to try and solve it. None of them have been successful and so the present administration is introducing NEST (National Employee Savings Trust) from 2012.

The introduction of NEST and its attendant legislation has implications for all employers, both in terms of cost and workplace administration. It also presents an opportunity for employees to begin saving for retirement with help from their employers and (in the form of tax relief) from the Government – although there are worries that as many as 1 in 5 employees will choose not to join the new pension schemes that employers will have to offer.

Briefly, the main proposals are as follows:

• Beginning in October 2012 (and phased in over four years), all employers will need to provide one or more qualifying pension schemes, which can include NEST

• Employers will also need to automatically enrol staff (unless they opt out) and provide staff with information

• Both employers and employees contributions to the pension scheme will gradually increase until October 2017, when they will reach 3% from the employer and 4% from the employee.

Inevitably, the proposals have run into criticism. Many commentators say that they don’t go far enough and the contribution levels – particularly when compared to the public sector – are too low to provide adequate pensions. Employers’ organisations are also critical, arguing that their members will be faced with both financial and administrative burdens, especially in companies that have high levels of staff turnover.

But even if minor changes are made when the final legislation comes before parliament, NEST will be introduced in 2012 – and whether you are an employer or an employee, it
will directly affect you.

The best advice for employers is to take action now. Those who already have a pension scheme need to ensure that it meets the minimum requirements which will apply. Those without a scheme may find it makes sense to set one up ahead of the relevant deadline, when there is bound to be a blizzard of last minute paperwork.

For employees, the logic of making adequate provision for their retirement has never been clearer: with people living longer, future Governments will not be able to fund the health care and social provision that has previously been available.

Employer or employee, the best course of action is to speak to one of the team, so that you can find out exactly what the introduction of NEST means for you.