Case study: Metal Assemblies steels workers for pension reforms

Metal Assemblies, a manufacturer of pressed steel components and assemblies for the automotive industry, employs about 120 people and has traditionally operated a stakeholder pension scheme into which it contributed 3% of all employee earnings.

In September, the business moved all its existing staff over to the national employment savings trust (Nest) on the same terms, ahead of auto-enrolment in 2014.

Company chairman Stuart Fell says: “One of the big advantages of Nest is that it allows the government to force the financial services industry to offer pensions that are efficient and affordable.

“In our old scheme, members paid fees of about 1% a year. That does not sound a lot, but in a market where investment is achieving only 2% or 3% return, it is taking away a third or half of the return. With Nest, it is targeting fees of something like 0.5%.”

Fell’s only concern about the reforms is that employers have to auto-enrol all staff, even if an employee has expressed a desire to opt out. “You could have a pay period where payments are made and then they want them back,” he says. “It has to be seen how much of a muddle that becomes.”

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