The annual management charge for members of the national employment savings trust will be 0.3%, while the charge on contributions has been reduced to 1.8%.
This follows the government’s announcement earlier this year that Nest would operate with both a annual management charge of 0.3% and a contribution charge of around 2%.
The Nest Corporation claimed the finalised charging structure was more competitive than that of a stakeholder pension. For example, the impact of the annual management charges on a median earner aged 36 would result in a 13% reduction of their retirement pot if they were in a stakeholder pension, compared to a 5.8% decrease if they were in Nest.
Although the 1.8% contribution charge will eventually be dropped, the Nest Corporation is unable to give a realistic estimate of when this will be. It will depend on a number of different factors, such as the numbers of people that join Nest and the attitudes of the trustees.
Lawrence Churchill, chair of the Nest Corporation, said: “I am delighted we are now able to provide certainty on the charge level for Nest – the levels we are announcing today make real the promise of a low-cost scheme for our future members.”
Tim Jones, chief executive, added: “Today’s announcement underpins our low charge offer – we have a charge level which approaches levels only found in the best of today’s pension schemes. This is a level our target market would be unlikely to access without Nest in the market.”
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