Upfront pension charge 'will deter savers'

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Upfront pension charge 'will deter savers'

Thu 18th Mar 2010

Ros Altmann, an industry adviser, said the National Employment Savings Trust (NEST) may deter people from saving for their retirement with this scheme because the initial savers are likely to subsidise the later ones.

She added: "Obviously it is going to take away quite a bit of their savings upfront and it does seem a lot of money to lose before you even start getting the benefits of saving."

According to the Department for Work and Pensions, NEST will be paid for by member charges and this two per cent levy will fund set-up costs.

The Office for National Statistics found that in 2007 and 2008 those with a private pension fund were more likely to have a higher income than those who did not.

It will become compulsory for employers to enrol employees into a workplace pension scheme from 2012 under the Pensions Act 2008.

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