NEST is noisy. For the contributions it’s taken, it’s been punching above its weight. For the public money it’s absorbed, (north of £300m) it hasn’t delivered much to the Wealth of the Nation,
Yet”NEST” is greatly loved. It’s taken over as the word we use to refer to Pension Reform even if NEST the pension scheme is turning out a flop!
“In the gloom the gold gathers the light about it.”
T0 its rescue come two bold socialists, Dr Gregg McClymont and Mr Andy Tarrant. The former is a Scottish sociologist with artistic glasses, the latter a Kiwi lawyer with a penchant for antipodean punk rock.
I feel I own a bit of this. Have you had a minister whisper in your ear in the middle of the night? Well that’s how it was for me!
I got an e-mail from the nocturnal shadow minister at 11.30 Monday night. Past my bed-time but not his. Attached a PDF tagged..
“don’t blog till tomorrow evening after the Guardian have broken the story”.
Wow- as close as Taps is going to get to the Thick of It!
Opening the PDF next morning , it turned out to be a learned paper from the Kiwi Punk arguing that Brussels should unshackle NEST immediately.
“Free the fledgling NEST”
“we need an act of NESToration”
You can read Andy’s Legal Analysis from the Pension Institute’s website here.
The bottom line is this. When the auto-enrolment idea was dreamed up some time around 2005 it was as a replacement for the failed “stakeholder pension ” experiment.
Oddly, the insurers who ran stakeholder pensions weren’t bothered, they would rather have stuck needles in their eyes than have 5m plebs on their books.
There was that alignment of interests to sustain pension exclusion so no-one cared that the stakeholder project failed- except the Labour politicians who’d dreamt it up.
That’s why the various pension ministers of the time determined to set up a decent “insurance-free” public pension that would accommodate their 5m feckless spongers – at a loss if needs be.
£600m was set aside from Gordon’s war-chest and PADA was born. The Personal Accounts Delivery Authority spent lots of the £600m on branding Personal Accounts which they then re-branded NEST, the National Employer’s Savings Trust.
And the insurers were furious.
“This NEST thing is a threat to the foundations of capitalism”
“state subsidised pensions will eat into our pension books, destroy our margins and give that Tapper the chance to poke fun at us. We can’t allow a state subsidy to turn us over”.
So they got their trade body the ABI to nip off to Brussels and snitch on the DWP and PADA (now NEST) and the next thing you know, NEST was shackled with a contribution charge, was banned from receiving contributions, couldn’t pay transfers to other schemes and could only take £4,400 per member per year.
If NEST had been a person, Amnesty would have registered it a political prisoner.
It wasn’t a person so it morphed into a white elephant.
And then the beastly insurers turned round to the proles/plebs/public and said
“only kidding”! We’re perfectly happy to have you on our books after all (so long as you join with your bosses who’ve got a bit more money)”.
And what ends up happening?
NEST gets landed with a £300m debt, restrictions that make the racehorse into a cart-horse while L & G and Standard Life clean up with pseudo-NEST mastertrusts.
The Kiwi Punk’s line is
“that was then, this is now. These restrictions made sense at the time.. but time has moved on and so should we.
Without an unshackled NEST these insurers will revert to type and declare that they’ve made a terrible mistake and as soon as they decently can – they’ll put up their prices to stuff the great unwashed who will wish they’d been put into NEST”
*Show Powerpoint slide of Otto T twiddling Dick-Dastardly moustache*.
Dr. Gregg McClymont’s now published his article about NESToration in the Guardian – you can read it here.
You want my view?
I agree that the shackles should be lifted. Andy’s analysis, which is more readable than much of this blog, contains an anonymised case study I’ve been working on – I could have done with an unshackled NEST a couple of times in the last quarter!
More importantly so could my clients and their employees!
So good luck to Gregg and Andy on their big EC adventure.
Go Boom in that Euro Room!