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Nest again- your thoughts please
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puddle96
Posts: 124 Forumite
I retired from the NHS last summer taking my NHS pension and then returned to working for the same trust on a 2 days a week fixed term contract to cover a skills shortage
The trust have now enrolled me in Nest - given that my contract only runs for 1 more year, and even if extended I don't intend to work for more than 4 more years is there any benefit to me being in this scheme?
Thanks
The trust have now enrolled me in Nest - given that my contract only runs for 1 more year, and even if extended I don't intend to work for more than 4 more years is there any benefit to me being in this scheme?
Thanks
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Comments
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I retired from the NHS last summer taking my NHS pension and then returned to working for the same trust on a 2 days a week fixed term contract to cover a skills shortage
The trust have now enrolled me in Nest - given that my contract only runs for 1 more year, and even if extended I don't intend to work for more than 4 more years is there any benefit to me being in this scheme?
Thanks
It would give you free money so it's probably worth it.
However can you not get access to the NHS scheme? That would be far better than NEST.0 -
Given that this is the second NHS/NEST post in the last few days, I just checked the scheme rules for the NHS Pension. They say the following (copy/paste):
Q What pension scheme will I be enrolled in?
A. You will be enrolled in the NHS Pension Scheme if you meet the scheme’s eligibility criteria. If you cannot be enrolled in the NHS scheme for any reason, your employer will enrol you in an alternative qualifying pension scheme, such as the National Employee’s Savings Trust (NEST).
Q I qualify for auto-enrolment. When will I be enrolled in the Scheme?
A Auto enrolment is being introduced by all NHS employers over a five year period, commencing March 2013. The largest NHS employers will conduct their auto–enrolment duties first. Medium and smaller sized employers will follow later on. If auto enrolment applies to you, your employer will inform you of your enrolment date nearer the time.
Q I already pay into the NHS Pension Scheme. Will auto enrolment affect me?
A If you are already paying into the NHS Pension Scheme then you should not be affected by auto enrolment. Your employer will write to tell you about this.
Q Do I have a choice about the scheme I am enrolled in?
A No. The NHS Pension Scheme is the default pension scheme for NHS employees to be enrolled in. If you are not eligible to join the NHS Pension Scheme for any reason then your employer must enrol you in an alternative qualifying pension scheme, such as the National Employee Savings Trust (NEST). Once your employer has enrolled you in a pension scheme, you can choose to opt out of it if you wish.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Thank you for your replies.
I cannot rejoin the NHS scheme as I am already taking a full NHS pension, I therefore understand that Nest is the Trust's alternative.
My question probably should have read - I have a working life of between 1-4 years max. I have a full NHS pension, a NHS widow's pension, currently have state widow's pension and will have a full state pension in my own right. With this in mind can anyone see any benefit to me of paying into Nest - my instinct is to opt out
Thanks0 -
Presumably you can 'cash in' the NEST if you leave it with less than £2k (and are over 60)?0
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The main potential benefit is any employer matching of contributions. If they are doing the legal minimum the 1% gain is not of great significance but is money you wouldn't get otherwise.The trust have now enrolled me in Nest - given that my contract only runs for 1 more year, and even if extended I don't intend to work for more than 4 more years is there any benefit to me being in this scheme?
NEST has assorted disadvantages that generally make it the lemon of the auto-enrolment market but there is a lessening of one restriction for those who are 55 or older:
You're normally banned from transferring out of NEST but from age 55 you can transfer your whole NEST pot to another pension provider. NEST insists that it is all of the pot and your NET pension scheme is then shut down, whether you want it to be or not. Your employer(s) can enrol you again and an employer is required by law to accept at least one enrolment request per year per employee.
In addition, for up to two defined contribution pot, if the value is no more than £2,000 and the person is 60 or older, they can take the whole pot as a lump sum. This applies to any DC scheme including NEST. The first 25% is tax free, the rest is taxed as income.
If your existing work pensions plus the state pensions and any annuities come to an income of at least £20,000 a year you can also use an option called Flexible Drawdown after transferring the money out of NEST, or can use this for any other personal pension pots. The £20,000 requirement is checked once only when you start to use Flexible Drawdown and the pensions must actually be in payment at the time. Flexible Drawdown lets you take out all of the money in a pension pot at any rate you like. The first 25% as a tax free lump sum, the remaining 75% as fast as you like and added to your normal taxable income for the year(s) in which you take it. Once you opt for Flexible Drawdown you are banned from making of getting made for you any contributions to any pension scheme in your name. What Flexible Drawdown does is let you get the tax relief of a pension without having the restriction on taking the income out, so it can be a really good way to boost your money. You might usefully consider whether it's worth starting another personal pension in addition to the work one to better exploit this potential. If you have or will have a high enough guaranteed income.
Assuming that you're 55 or older and perhaps over 60, the chance to get the employer contributions, suffer NEST's limited investment options for only a short time, then transfer out may well be worthwhile.
You'll still have to pay their high 1.8% initial charge and not particularly low 0.3% ongoing charge but for those who are relatively close to retirement the NEST scheme is considerably less bad than it is for those who are younger.
So in some ways it's really down to the value of what your employer will add. That'll be where most of the potential NEST investment gains come from. But you should be aware of the possibility of Flexible Drawdown if you might qualify for that.0 -
Thank you all for your thoughts - particularly James for the info on flexible drawdown.
its all a little confusing when you think your pension is sorted and then something else is thrown into the mix - particularly as I've had no communication from the trust at all0
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