ThelatesteffortcomesintheformoftheNationalEmploymentSavingsTrust(Nest)。

Itwillworklikethis:unlesstheyspecificallyoptout,employeeswillautomaticallypay4%oftheirsalaryintothescheme。

Theiremployerswillpayinanother1%atfirst,risingto3%by2017andtaxpayerswillchuckinanother1%bywayoftaxrelief。

Sobythetimethethingisfullyrolledout(itwillbelaunchedinstages,withthebiggestemployersforcedtoparticipatefirst),employeeswhodontoptoutwillbegettingtheequivalentof8%oftheirsalarygoingintotheirpoteveryyear。

Butgoodasthissounds,thereareproblemsa-plentywiththeplan。

Firstisthesimplefactthatpersuadingpeopleonlowincomestosavemightnotactuallybemuchgoodforthem:ifmeans-testinglatermeansthattheyloseoutonbenefitsasaresultofhavingsavings,theyllhavesacrificedpartoftheirincomesfornothing。

Thesecondproblemistime–itisallverywellgettingpeopletosavebutshouldthosewithsmallpotsbeencouragedintotheequitymarkets,particularlyiftheirretirementloomsinthenextdecadeorso?

Aresponsiblefinancialadviserwouldprobably?

sayno。

Thethirdproblemistheusualone–cost。

MuchhasbeenmadeofhowcheapNestwillbe。

Butforthosefirstin,itwontberemotelycheap。

Why?

Set-upcosts。

Nesthasapparentlyborrowedaround£600mfromthegovernmenttogetgoing。

Anditdoesntintendtopaythatbackoutofitsannualfees。

Instead,itwillchargea?

2%levyonallcontributionsuntilthecostsarecovered–anditwontmakeaguessastohowlongthatwilltake。

Maybetenyears。

Maybe20。

So,ifyousignupin2012,youllbepayingforthe£360,000thatwasspentondesigningthelogo(thewordNestinsideanegg)。

Youllbepayingsalariesalreadypaidtomanagerswhovebeenemployedbytheschemeforseveralyears–thechiefexecutivewasappointedin2007andtakeshome£200,000ayear。

Youllbepayingforallthebureaucracyanddilly-dallyingthatsurroundsthiskindofthing。

Thentherearethefees:Nestsaysitisaimingforanannualmanagementcharge(AMC)ofaround0。

3%。

Thatsaniceidea。

Butitisntverylikely。

Theschemeisforecasttohavearound£150bnundermanagementby2050and,shouldthathappen,itispossiblethatamanagerwouldtakeitonat0。

3%(£450mshouldbeaboutenoughtocoveranyonescosts)。

Butintheearlydays,whenafewhundredthousandpeoplearechuckinginunder£1,000ayeareach?

Noway。

Onepercentwouldbeamorerealisticguess。

AnddontforgetthattheAMCisjustthebeginning。

Addintherestoftheexpensesthatcomewiththeaveragefundandyourtotalexpenseratio(TER)isgoingtoendupatmorelike1。

5%。

Allthisworriesexperts–theythinkitmightdeterpeoplefromparticipating。

Imnotsosure。

UKinvestorsseemremarkablyrelaxedaboutfees–iftheywerent,howwouldanindustrythatchargespunters1。

5%-plusofthevalueoftheirassetstounderperform(onaverage)anygivenindexsurviveatall?

Therealriskisnotthatwewontinvestbut–intheearlyyearsatleast–thatwewillandthatwewillbedisappointedbyourreturns。

Letssayyouearn£20,000andenrolledinNestin2012。

Youputin4%ayear(£800)。

Thenyougetanother1%backintax(£200)and1%fromyouremployer(£200)。

Youpaya2%chargeoncontributionseveryyear,alongsideaTERof1。

5%andyourmanagermakesanannualreturnof6%(Imtryingtobeoptimistic)。

Bytheendof2017,yourpotwouldbeworth£6,500。

Thatsnotbad–ifyouhadjustputyourown£800inasavingsaccountat5%,youdhaveonly£4,600。

ButthefactthatyoudobetterbybeinginNestisnotafunctionofthelowcostswehearsomuchabout,butofthecontributionsthetaxpayerandyouremployerareforcedtomake。

Putting£1,200ayearinasavingsaccountatamuchlowerrateofreturnof,say,4%wouldhavedonemuchbetter,leavingyouwithapotof£6,760。

ThatrathersuggeststheschemewillbefeatheringthewrongNests。