Competition for NEST before it even starts?

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Danish-based rival to the National Employment Savings Trust (Nest) NOW: Pensions will carry a £1.50 a month administration charge and a single default fund, it has been announced.

Now Pensions is a low-cost, cautious, multi-employer and trust-based pensions scheme launched by Danish pension provider ATP to compete with government-backed Nest. Nest and NOW will go head-to-head competing for the lowest earners when auto-enrolment begins next November.

Under NOW’s scheme, members will be entered into a default fund combing three other funds: a managed diversified growth fund, a retirement protection fund and a cash protection fund. Charges will be £1.50 per month for administration and a 0.3% annual investment management charge

Morten Nilsson, chief executive of NOW: Pensions, said: ‘We believe auto-enrolment is a wake-up call to the UK pensions industry, and ATP’s experience in servicing virtually the entire Danish working population, 4.7 million members, and proven track record shows there are alternatives

‘We have been providing Denmark’s working population with stable, consistent returns over the past 45 years, no matter how volatile the economic climate, and we are confident we can do it here.’

Nest will charge 1.8% on each contribution and a 0.3% annual management charge.

On the face of it £1:50 per month may look like a low cost - but only if you are contributing more than £83.33 gross per month. What happens when contributions stop which is the best fund Nest or Now Pension. Who will advise employers and employees on the implications of their choices.

Business owners need to start forming relationships with IFAs to get help on the coming pensions decisions.

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