Nest upfront 1.8% contribution charge might be abandoned to give members better value more quickly if more assets come in. In order to repay the taxpayer loans, Nest has felt forced to levy an initial 1.8% upfront charge, which renders this supposed-to-be low cost scheme relatively expensive. This charge is a self-inflicted problem for Nest, but results from the way it has been set up. Indeed, it means the first year of contributions could face charges of more than 2%. This is hardly a low cost scheme. If Nest was able to count on more assets flowing in at the beginning, it may be able to alter its charging structure to become more competitive. Anyone who does not stay in the scheme for long will end up paying much higher charges than the 0.5% target amount.
Nest made it clear that the 1.8% initial charge was a result of having to repay the loan and once it is repaid, the charging structure will change.