The UK government has introduced a system for the employees under which they will be enrolled on to their employer's pension scheme. However, if their employer does not provide the saving plan, they would be put on to NEST. The scheme is applicable for both small and medium-sized businesses.

According to sources, businesses fear that staff would reject the proposed charges related to NEST to be introduced in 2012. The decision was taken to encourage savings among the workers.

According to data given by CBI, saver in private sector contributes £1,000pa and they would prefer 0.4 per cent annual charge against the NEST. It added that even a current AMC of 0.6pc would be more attractive than NEST over first six years.

CBI Deputy Director John Cridland said "NEST is a key part of extending the offer of a good pension to everyone in the private sector." He added that the scheme is low cost and easy to understand, therefore it should spur people to start saving.