NEST’s ministry of disinformation.

Posted on December 31, 2015 by henry tapper

Sometimes you read a statistic and you don’t know what to think of it…

And sometimes you read a statement and you want to punch the screen.

What  can be said for NEST is that it has a large number of the employers who have staged and have used it.

Employers who set up their auto enrolment pension schemes with NEST end up feeling pretty good about it all. It could be the quick and straightforward set up. It could be that it’s free to use. Or perhaps it’s knowing that NEST has been set up by the government specifically for auto enrolment.

Every employer in the UK will have to offer their staff a workplace pension scheme. Over 34,000 employers have already chosen NEST to help their staff save for the future

That’s from NEST’s website – its opening gambit. NEST has been set up by the Government and its “free to use”. Free for whom? NEST is operating at a loss and is already over £400m in debt. Who is going to repay that debt and who is it a debt to?

This is disinformation on an Orwellian scale. Disinformation that glories in its Goebbelian self-confidence.

NEST – a brave new world of  a the sump for unloved workers?

So what exactly is that 41% referring to? Are they the lucky 41% of those enrolled who had employers who chose NEST? Many of those 34,000 employers who chose NEST in 2012 and 2013 used it as a dumping ground for workers they didn’t want polluting their pristine occupational pension schemes.

For many large employers NEST served and is serving a public duty as a “pension sump”

And what of the 59% who appear to have no confidence in pensions? Are they enrolled in schemes which were chosen by employers who perversely did not choose NEST for their staff.  Employers who thought pensions were free – like NEST – only to discover that it costs money to run a pension scheme.

Let’s be clear about this, NEST is no more free than banking is free.  NEST comes at a cost to members and a cost to employers who are not – to use NEST’s phrase – “self sufficient”. Self sufficient means doing the pension thing using the NEST instruction manual and not much else. As we all know, you can go a long way with an instruction manual – ask any user of Apple products. But NEST and Apple and your bank account are not free if something goes wrong. Infact putting pensions right like fixing a broken Apple product or paying bank charges when running an overdraft –  is anything but free.

NEST is running its own overdraft in the form of a loan from the tax-payer but you wouldn’t think it reading this cocky nonsense.

 

NEST’s members may be portable, but the liabilities aren’t.

And now for the biggest lie in the pack- the new twitter campaign claiming that NEST is portable. Let’s be clear about this. When an employer signs up to NEST , they complete an employer admission agreement where they agree to certain liabilities as an employer. These are the employers “terms and conditions” as defined in the NEST  “orders and rules“.

Now I hate to get all legal on you, but these terms and conditions contain this paragraph

The Employer will make such payments to the Trustee as may be required under the Scheme’s payment schedule applicable to the Employer and such charges (if any) as may be payable by Employer under the schedule of employer charges which the Trustee determines to be payable in order to recover from Employers the costs of the administration and management of the Scheme which the Trustee determines to be attributable to the acts or omissions of Employers.

Which I read to mean that the employer is potentially liable for the costs of administration of the scheme as a whole which includes the cost of administering all the little pots that are created by members who have left. Pot may follow member in some ways, but liabilities sit with employers.

The terms and conditions are very clear – ultimately participating employers in NEST are on the hook for the costs of the scheme.

Which makes me wonder why any employer thinks that NEST is free, that they have no residual liabilities for the costs of deferred members and that NEST communicates in a fair and decent way. Not like this

A very high proportion of those members that NEST has taken on so far are never going to have pots big enough to be “self sufficient”. In many people’s opinion, NEST cannot be self sufficient as it currently operates. NEST is a brilliant thing that keeps auto-enrolment on the road but the statement

Employers who set up their auto enrolment pension schemes with NEST end up feeling pretty good about it all

Reminds me of this

disinformation

 

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions and tagged , , , , , , , . Bookmark the permalink.

Leave a Reply