There are reports today within my trade press that the Government are close to scrapping the idea of short-term pension refunds. At the moment if you join an employers pension scheme and leave them within 2 years you are able to get a refund of your contributions, less any tax relief.
The administrative nightmare that this poses for NEST, when it eventually gets launched, is fairly obvious and probably the main factor for bringing in this new ruling (as yet unconfirmed). NEST will eventually see everyone making compulsory pension payments of 5% of salary with another 3% from employers (8% in all). The main problem for the state is that not enough people save enough for their retirement, most options have been considered, so now it will be compulsory to save (well in a couple of years).
This will be a major revolution for employers who must comply with the legislation and have to report their payments to HMRC. At the moment, I have to say that as a pension NEST is not that attractive, its not terribly flexible and you cannot move money in or out easily – until you retire. However, it is better than a poke in the eye, but at a maximum of £300 a month, is not going to make anyone have a retirement of luxury.
More on NEST to follow – also you can search this blog for previous items relating to it.
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