Please sir, may we take the piss?

From The Times:

Low earners to lose chunk of pension savings from word go

Experts say that Nest could be an expensive way of saving for some and that many will be deterred by upfront charges. The flagship scheme to persuade millions of low-paid employees to save for their retirement came under fire yesterday after the Government revealed that all contributions into the new fund would be subject to a surprise 2 per cent fee. (1)

Outside experts (2) said that the National Employment Savings Trust, could be an expensive way of saving for some people and that many would be deterred by upfront charges that might actually shrink their savings pots in the early years. Between three million and six million low-to-moderate earners are expected to join Nest, the centre-piece of government plans to force all employers automatically to enrol employees in a workplace scheme of minimum standards from 2012. (3)

Nest, the default option for employers unable or unwilling to offer anything better, has been billed as a super low-cost savings scheme and the annual management charge of 0.3 per cent is low by industry standards. (4)

However, the Government has declined to pay for almost any of the start-up costs and instead is extending a loan to the scheme. To repay the loan and interest, Nest is implementing the controversial contribution commission — which will apply to all contributions, whether from employer, employee or taxman. (5)

1) Nope. Not a surprise at all, given the insurance companies' previous form in these matters.

2) For 'outside expert' read 'anybody who gives it more than a few seconds thought', like Former Tory or me.

3) Key words: 'force', 'automatically' and 'minimum standards'. Can anybody see this going horribly wrong, or at best miserably failing to achieve anything, like the much-vaunted Stakeholder Pension?

4) 0.3%? Doesn't sound like much, does it? But it eats away about ten per cent of your pension fund's investment income, year after year after year.

5) FFS, 'the government' or 'the taxman' don't pay for anything. If people who contribute get tax breaks then all things being equal, those tax breaks are going to be paid for by those who don't contribute, being mainly people with crippling mortgages; low or fluctuating incomes; and people like me who trust insurance companies even less than they trust the government. I am happy to report that I have never put a penny into a pension fund ever and never will. My opt-out form will be with HR as soon as it's available to download.