- The charging structure for National Employment Savings Trust needs an urgent overhaul, according to a former Downing Street pensions adviser.

Ros Altmann - who was an adviser to Tony Blair during his premiership - says the long-awaited report from the Office of Fair Trading, assessing the charges levied on UK pension plans, is about to be released and is expected to recommend a cap on the charges for UK pensions, probably around 1%.

She adds: "Importantly, a charge cap of 1% would expose just how expensive the National Employment Savings Trust (NEST) is. The Government established NEST as a national scheme that will ensure all employers can access a pension scheme for their staff.

"Taxpayers have already spent hundreds of millions of pounds setting it up. Yet this government-sponsored scheme charges more than double the 1% cap for many workers, as NEST takes 1.8% out of every worker's contribution and there is then an ongoing annual charge of 0.3%.

"The Treasury apparently insisted on a high up-front charge in order to try to recoup the taxpayer loan to NEST as quickly as possible. However, the value offered to NEST's members has been compromised and the charging structure needs to be urgently rethought.

"Any worker who does not stay in the NEST scheme for many years will be at risk of paying much higher charges in NEST than in other schemes, and possibly even more than the 1% cap that might be imposed. NEST only works out better value if the 1.8% charge can be spread out over many years. But older workers who are automatically enrolled may not be able to remain in the scheme long enough to overcome the initial fee."

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