Frank O'Donnell

National Employment Savings Trust (NEST) will be the name for the new national workplace pension scheme backed by the government.

The programme, previously known as Personal Accounts, will be one option open to employers who will have to enrol workers into a workplace scheme. The overhaul of pension provision will be phased in from 2012 to 2016.

The Trust programme is intended to ensure low to middle income workers save for their retirement and firms also contribute.

How the new scheme will work?

Workers will be enrolled in a pension unless they opt out. This will apply to workers aged over 22 and earning more than £5,035 a year. Employees will put a minimum of about 4% or their salary into the scheme.

Employers will eventually contribute a minimum of 3%, although this will start at 1% in the three years from 2012, rising to 2% for another year and then up to 3%. There is also tax relief worth another 1%.

Nest – which has an egg as its logo – will be run by a not-for-profit trustee corporation and will provide one of the options for employers.

Joanne Segars, chief executive of the National Association of Pensions Funds, said: “We all need a pensions nest egg to enjoy a comfortable retirement.

“Already almost 12 million people are saving in a workplace pension with contributions from their employer. This announcement brings us a step closer to the 2012 reforms when nearly all working people, especially those on low and moderate incomes, will be given this opportunity.”