Julian Knight: Pension scheme has become an empty NEST
Nine months after it was set up, the national savings trust has attracted just 100,000 savers
Saturday 01 June 2013
It seems the National Employment Savings Trust – or NEST for short – is struggling to attract members. When the scheme was set up by the government it seemed that it would have a virtual clear run to vacuum up the millions of employees who have been or are due to be auto enrolled into an employee-sponsored pension scheme. However, it is now nine months since the first tranche of people were auto-enrolled and NEST has only managed to attract 100,000 savers, compared to the 250,000 it was widely rumoured to be targeting.
NEST of course is putting on a brave face. But it is a very worrying sign for the scheme which depends on major economies of scale to deliver quality and low prices to savers.
Many – including NEST's senior management – thought that it would become a giant fish in a medium sized pond but nothing of the sort is happening yet.
Campaigners rightly point to NEST's restrictive rules on transferring in and out and its cap on contributions as a reason for its turgid performance to date.
NEST is also suffering from being perceived rightly or wrongly by business as the bureaucratic public sector solution against a host of rival such as L&G and Pensions Now from the private sector.
NEST's 'director of engagement' (yes that is a real job title) says that the scheme is sanguine as it was only ever meant to complement the private sector rather than replace it, but lean close to my office window and I can almost hear the gnashing of teeth from NEST towers.
I have nothing against NEST per se. It encourages more saving for retirement and that is wholly a good thing.
But the scheme is as yet not winning hearts and minds amongst employees and particularly – and crucially for its bottom line – employers.
It is far from too late for the scheme and it has some notable wins such as BT group and the BBC but it really has to up its game or else it will only be a medium size fish in a very big pond.
Not so dastardly banks
Those dastardly banks are at it again. I could have written that sentence any week throughout my career and had you nodding away.
The latest banking horror show is in the form of the huge number of complaints made to the Financial Ombudsman Service.
The figures of course are massive but importantly completely distorted by the payment protection insurance mis-selling scandal. Around three quarters of complaints about Lloyds, for instance – by far our biggest High Street banking group – were related to PPI.
Surprisingly banks have only been forced to reveal their complaints for a few years. They used to get away from saying this was sensitive market information and couldn't be revealed – and I do wonder with PPI what is the point?
Perhaps we all need to report the non-PPI figure.
Only why, you ask? Well, PPI has become such a viper's nest. On the one hand you have some banks deliberately putting unfair obstacles in the way of legitimate claims and on the other we have claims companies – as I have reported many times – simply lodging bogus claims.
Strip out PPI and the FOS figures show some banks getting better at dealing with their customers and others worse, just what you would expect in any market over time.
Bowled over by the taxman
HM Revenue & Customs are targeting cricket clubs for tax inspections.
Again indignation reigns with one cricket club saying chair saying that it was unfair to target these sports clubs as "they weren't Starbucks".
Too true. In my experience the teas are generally much more delicious at a cricket club than at Starbucks.
However, the old saying that two wrongs don't make a right applies here – all because Starbucks escapes paying what many members of the public feel it ought to pay it doesn't mean that your local gentleman's XI shouldn't be sure to cough up what it owes.
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