MSE News: Government unveils Nest pensions charges

This is the discussion thread for the following MSE News Story:

"The Government has received a mixed response after announcing its charges for its new pension scheme, which starts in 2012 ..."
«1

Replies

  • ffacoffipawbffacoffipawb Forumite
    3.6K Posts
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    ✭✭✭✭
    MSE_Guy wrote: »
    This is the discussion thread for the following MSE News Story:

    "The Government has received a mixed response after announcing its charges for its new pension scheme, which starts in 2012 ..."
    Read the full story:

    OfficialStamp.gif

    Hopefully irrelevant after May 6th.
  • edited 16 March 2010 at 11:35PM
    jamesdjamesd Forumite
    25.8K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    edited 16 March 2010 at 11:35PM
    So lets see:

    1. 0.3% ongoing annual charge and 2% on money going it. Hargreaves Lansdown offers HSBC's UK all share tracker fund at 0.25% annual charge and 0% on money going in, so NEST that was introduced at the urging of the Pensions Commission to be cheaper than other pensions is more expensive than even one SIPP, let alone competitively sold personal pensions.

    2. You can't transfer money out of NEST to a more competitive deal, even though you can for other workplace pensions.

    3. The NAPF claim that the charges match those of the best workplace pensions today is ridiculous. I have a FTSE All-Share tracker at work with a 0.1% annual charge and no initial charge, so this proposal is three times as expensive even without the initial charge.

    Anyone threatened with having to pay into NEST should be asking their employer to set up a decent, competitive, low cost scheme instead.

    If your employer won't do that, alternatives include the relatively high risk option of getting 30% tax rebate on VCT investments, or using personal pensions. Today these don't get employer contributions but that's another discussion you can have with your employer.
  • dunstonhdunstonh Forumite
    109.4K Posts
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    ✭✭✭✭✭✭
    As it currently stands, there is also no higher rate relief on NEST.
    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.
  • hugheskevihugheskevi Forumite
    3.2K Posts
    Part of the Furniture 1,000 Posts Name Dropper Car Insurance Carver!
    ✭✭✭✭
    As it currently stands, there is also no higher rate relief on NEST.

    Dunstonh, could you reference this please?

    My understanding is that the individual's contribution rate is 4%, covering the band of earnings between about £5,000 and £35,000 (ish).

    But, that just determines what the contribution is, and after that the contribution would receive tax treatment in the same way as a contribution to any other type of pension.
  • dunstonhdunstonh Forumite
    109.4K Posts
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    ✭✭✭✭✭✭
    Dunstonh, could you reference this please?

    My understanding is that the individual's contribution rate is 4%, covering the band of earnings between about £5,000 and £35,000 (ish).

    All you read says employees will contribute 4%, employers 3% and the government 1%.

    I havent seen anything that suggests the Govt contribution will increase if you are a higher rate taxpayer.
    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.
  • hugheskevihugheskevi Forumite
    3.2K Posts
    Part of the Furniture 1,000 Posts Name Dropper Car Insurance Carver!
    ✭✭✭✭
    All you read says employees will contribute 4%, employers 3% and the government 1%.

    I havent seen anything that suggests the Govt contribution will increase if you are a higher rate taxpayer.

    I've followed Personal Accounts/NEST closely and I'm certain that the contributions will be eligible for higher rate tax relief - the 4/3/1 line is about pitching tax relief as a matching contribution, which people tend to understand better, rather than a different system of tax relief.

    I think the tax relief will operate in the same was as personal pensions do currently, ie basic rate relief at source, with higher rate relief claimed from HMRC.

    I imagine this might cause a bit of a problem for higher rate taxpayers not subject to self-assessment given the existing number of people failing to claim higher rate relief.
  • edited 17 March 2010 at 9:16PM
    stphnsteveystphnstevey Forumite
    3.2K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    ✭✭✭✭
    edited 17 March 2010 at 9:16PM
    The real cost to employees will be the lack of salary increases due to employers compensating for their compulsory employer contributions.

    The money has to come from somewhere, employers are not getting anything extra to contribute to employees pensions.

    2% charges on contributions will be nothing in comparison to a 2% loss in salary increase

    PS - how long will the 2% charge last for?
  • BatchyBatchy Forumite
    1.6K Posts
    The real cost to employees will be the lack of salary increases due to employers compensating for their compulsory employer contributions.

    The money has to come from somewhere, employers are not getting anything extra to contribute to employees pensions.

    2% charges on contributions will be nothing in comparison to a 2% loss in salary increase

    PS - how long will the 2% charge last for?

    I guess it depends how long you keep paying in contributions for lol
    Plan
    1) Get most competitive Lifetime Mortgage (Done)
    2) Make healthy savings, spend wisely (Doing)
    3) Ensure healthy pension fund - (Doing)
    4) Ensure house is nice, suitable, safe, and located - (Done)
    5) Keep everyone happy, healthy and entertained (Done, Doing, Going to do)
  • yelfyelf Forumite
    845 Posts
    Dont forget at least one of the investment options wil be HEAVY in gilts (so basically the goverment will be borrowing from the pension funds they receive from forcing employees hands)
  • Hmm, run this by me again we are will now have to pay an additional amount into a pension scheme... no choice... forgive me but is this not why i pay national insurance? if so why do we have to pay into 2 pension schemes?
This discussion has been closed.
Latest MSE News and Guides

Stoozing, sublets & summer sips

This week's MSE Forum highlights

MSE News

Martin Lewis quizzes Rishi Sunak

Watch the cost of living support Q&A here

Join the MSE Forum discussion

48 craft beers for £50 delivered

One-off bundle for newbies. Excludes Northern Ireland

MSE Deals