Nest confusion

Fireflyaway · 22 November 2017 at 9:04PM

I have a Nest pension. My former employer was paying in but now I've left them I thought I might carry on and make my own contributions.
I logged on and fiddled about with the calculator to see what sort of pension various contributions would get me and was very surprised.
I set my retirement date for 30 years ahead with contributions of £1000 per month ( not saying I would pay that much) and it stated the pot was £48k with an annual income of £1900. I know I have to think of inflation but surely that can't be right? If I just saved I'd have £360,000 in the bank.
Am I misunderstanding something here?

Audaxer · 22 November 2017 at 9:55PM

That can't be right or no one would invest in it. Are you sure you have input the right figures?

dunstonh · 22 November 2017 at 11:21PM

and it stated the pot was £48k with an annual income of £1900.

What assumptions were used? The key is always in the assumptions. They have probably taken inflation into account to give you a todays spending power. There will be a growth rate (which could potentially be lower than inflation if set too low. There will be an income rate. Possibly based on low assumptions.

If you dont know the assumptions then any figures out of a calculator are pointless. The assumptions could be reasonable of they could be completely misleading.

Fireflyaway · 22 November 2017 at 11:55PM

Thanks both. It stated it was based on ' today's ' rate, which I take to mean the equivalent of current spending power but all the same it seems extreme. Why would I save 1k a month for 30 years to end up with a pension of £158 a month?! Might try some other calculators.

dunstonh · 23 November 2017 at 12:07AM

All calculators would give the same result if the same assumptions are used. So, make sure you read the assumptions.

£1000pm for 30 years is £360,000. So, ignoring growth and inflation (assume they cancel each other out) and that is an income at 3.5% of £12,600. That is a crude measure but probably more useful than many of these calculators that use assumptions away from the average.

Malthusian · 23 November 2017 at 11:00AM

The figures are clearly wrong. Are you sure you didn't put £1,000 a year rather than £1,000 a month?

IanSt · 23 November 2017 at 11:20AM

Fireflyaway wrote: »

Am I misunderstanding something here?

I've used the calculator that I found there https://www.nestpensions.org.uk/schemeweb/NestPublicWeb/faces/public/BE/pages/pensionCalculationPublicArea.xhtml and it looks as though you've definitely put in an incorrect piece of data somewhere.

When I enter your values in I get a pot of £659k and yearly income of nearly £22k.

I'd guess the most likely areas to cause this are : is the salary being put per year or missing a zero in the £1000, or maybe you entered an incorrect value as the date of birth or retirement age?

Nest confusion

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