Warning over cost of pension

High and complicated charges in the Government's new workplace pension scheme could deter millions of savers, business leaders warned.

The CBI raised concerns that lower paid employees would "baulk" at costs of the National Employment Savings Trust (Nest) which will be introduced in 2012.

The business group said it supported the idea of encouraging a wider take-up of pensions among millions of workers in private firms, but warned of potential problems over the move to automatically enrol staff.

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The scheme could be "undermined" when savers realised that putting money into the trust would leave them worse off for over a decade when compared with saving into other pension schemes.

John Cridland, deputy director general of the CBI, said: "Nest is meant to be low-cost and easy to understand, so that it spurs people to start saving, but the risk is that many staff will think they are getting a raw deal, and will quit the Nest scheme.

Nest members will initially be charged 2 per cent of their contribution when they pay money into the scheme, which is meant to cover the set-up costs.

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