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The Pensions Commission, in its Second Report, published in November 2005 recommended two key elements of reform to the UK pensions system. One was reform of the state pension system to make it “less means-tested and closer to universal” than if the existing indexation arrangements continued indefinitely. The other was the creation of:

A low cost, national funded pension saving scheme into which individuals will be automatically enrolled but with the right to opt out, with a modest level of compulsory matching employer contributions, and delivering the opportunity to save for a pension at a low Annual Management Charge.

The Labour Government, in its May 2006 Pensions White Paper, adopted the Commission’s proposed approach of an integrated package of reforms: a new pension saving scheme, along the lines of the Commission’s proposed National Pension Savings Scheme, and reform of the state system with the aim of “providing a foundation for private saving.”

The first part of this package of reforms was provided for in the Pensions Act 2007. This provided for reforms to the state system and established a Personal Accounts Delivery Authority (PADA) to enable the Government to harness private sector expertise in preparatory work for the new scheme. A subsequent piece of legislation – the Pensions Act 2008 – legislated for the introduction of new duties on employers to automatically enrol jobholders into, and to contribute to, a qualifying workplace pension scheme and the introduction of a new pension saving scheme – initially called “personal accounts”, now called the National Employment Savings Trust (NEST).

The Conservative Liberal Democrat Coalition Government set up a review of the proposed arrangements for automatic enrolment and NEST. The review, which reported in October, found that NEST was necessary to support successful implementation of automatic enrolment.

This note looks at the background to and development of NEST. A further note – SN 6415 National Employment Savings Trust (NEST), 2012 onwards – takes the story forward.


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