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Implications of The National Employment Savings Trust for Vulnerable Sectors of the UK Labour Market: A Reduced-Form Statistical Evaluation

Published online by Cambridge University Press:  26 March 2020

Justin van de Ven
Justin van de Ven*
Affiliation:
National Institute of Economic and Social Research
*
1 e-mail: jvandeven@niesr.ac.uk
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Abstract

The National Employment Savings Trust (NEST) is a new pension scheme that will be introduced for employees on modest incomes in the UK from 2012. This paper draws out the implications of the NEST, focusing upon low-paid employees and their employers using data from the Annual Survey of Hours and Earnings. The results suggest that the NEST will increase labour costs by between 0.6 and 0.8 per cent on average, and have a disproportionate effect on low pay industries and private sector firms employing fewer than 25 employees. The analysis highlights the potential role of the minimum wage to shield low pay workers from paying a share of the subsidies that the NEST will afford to its members.

Keywords

Pension savinglow payemployer pensionD31H22
Type
Research Articles
Information
National Institute Economic Review , Volume 219 , January 2012 , pp. R77 - R89
Copyright
Copyright © 2012 National Institute of Economic and Social Research

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Footnotes

I am grateful to the Low Pay Commission for financial support to conduct this study. I received useful comments regarding the research from attendees at the Low Pay Commission research Workshop in October 2010, and from Gerry Franks, Tim Butcher and two anonymous referees on earlier drafts. Anitha George conducted preliminary analysis in relation to the work presented here.

JEL Classifications: D31; H22

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