Nest and auto-enrolment

Tennisfanatic_2

Is MSE doing any campaigning concerning the new auto-enrolment pension the Government is rolling out? According to a report in last Monday's FT, the commercial penson providers are trying to nobble it by preventing people transferring their existing pensions in and capping the amount invested in it. They have a vested interest as the new pension should be considerably cheaper than what they provide. It would be good to see Martin express views publicly on the subject to make sure we don't have another pensions misselling scandal.

rpc

Tennisfanatic wrote: »

the commercial penson providers are trying to nobble it by preventing people transferring their existing pensions in

That may not be a bad thing - once money is in NEST it cannot be transferred out. I could see an argument for a missale there!

Although I thought NEST was not going to permit transfers in either, intially at least. In which case the pension companies are preventing people doing something that they are not permitted to do...

Tennisfanatic_2

I think the article suggests that Nest is not permitting transfers in because of lobbying by the pension companies. And bear in mind that the money that could be transferred in from other pension companies is already caught by the pension rules anyway.

rpc wrote: »

That may not be a bad thing - once money is in NEST it cannot be transferred out. I could see an argument for a missale there!

Although I thought NEST was not going to permit transfers in either, intially at least. In which case the pension companies are preventing people doing something that they are not permitted to do...

dunstonh

According to a report in last Monday's FT, the commercial penson providers are trying to nobble it by preventing people transferring their existing pensions in and capping the amount invested in it.

Wrong. NEST itself is not allowed to receive transfers from other schemes. NEST itself has a cap. No third party is trying to change this.

They have a vested interest as the new pension should be considerably cheaper than what they provide.

If NEST was cheaper then that point may be fair. However, it is not.

It would be good to see Martin express views publicly on the subject to make sure we don't have another pensions misselling scandal.

I doubt Martin would campaign on the basis of inaccurate information.

Tennisfanatic_2

You say that no third party is trying to change this. According to the FT report, a Parliamentary committee has said that the restrictions should be removed from the Nest scheme as a matter of urgency. The commercial providers are naturally in favour that they remain in place until I think 2017.

The report also notes that the competing schemes from the commercial providers do not suffer from the same restrictions.

As for how reasonable Nest's costs, then that can be resolved by doing some basic research even though I find it difficult to believe it will be more expensive than the life insurance companies.

Perhaps Martin should read the article for himself (it is by Pauline Skypala) and make up his own mind.

dunstonh wrote: »

Wrong. NEST itself is not allowed to receive transfers from other schemes. NEST itself has a cap. No third party is trying to change this.



If NEST was cheaper then that point may be fair. However, it is not.



I doubt Martin would campaign on the basis of inaccurate information.

dunstonh

You say that no third party is trying to change this. According to the FT report, a Parliamentary committee has said that the restrictions should be removed from the Nest scheme as a matter of urgency. The commercial providers are naturally in favour that they remain in place until I think 2017.

The rules on NEST are already in place. They have been in place for some time. The next review is 2017 and its only right that opinions are offered for that closer to the time.

The report also notes that the competing schemes from the commercial providers do not suffer from the same restrictions.

That is because commercial providers operate in a commercial environment. NEST is competing in that market but on a remit that is more in line with communism than a capitalist democracy. If you give a body a commercial advantage then there has to be some protections in place to protect the others.

As for how reasonable Nest's costs, then that can be resolved by doing some basic research even though I find it difficult to believe it will be more expensive than the life insurance companies.

You can buy pensions with 0.2% AMCs with no initial charges. That beats nest which only offers very simplistic options anyway which are comparable. NEST being 1.8% initial charge and 0.3% AMC.

jamesd

NEST already looks likely to be a mis-selling problem because you can't transfer money out of it. That makes it unsuitable for those who take an interest in their pension planning or who may do so in the future. The trouble is that it's being sold to employers, not employees. And employers may not care until their employees point out the better options that are out there and ask them to use a decent one instead.

Take a look at NOW:Pensions for what looks like the best of the current NEST-like options. That does allow transfers out and in and doesn't have a cap on how much can be paid in either. Also seems to have some improvements to the admin side for employers.

You can still get cheaper deals than those, say using index tracker funds in the most inexpensive personal pensions, if you think that index tracker funds are a better idea than what these offer. Before thinking that, you should take a particularly good look at how NOW:Pensions' predecessor has done in its home market with its blended investment fund. It's been very impressive and looks like being a good option for those who want to just pay money in and forget about it.

Velcro_Hotdog

Who in their right mind would advise a transfer into Nest at present? With no way of transferring out wouldn't you be left wide open to miss selling claims in future?

Tennisfanatic
It would be good to see Martin express views publicly on the subject to make sure we don't have another pensions misselling scandal.

How would he make sure we don't have another scandal???

JoeCrystal

I am still hoping that my employer will not opt for NEST but instead some other pension schemes. Still, I will not opt out since it still mean free money.

Considering how low my basic income is from my job, it would not sadly amount to much overall. Roughly £15 per month at 2% contribution (Oct 12 - Sep 17), or £38 per month at 5% (Oct 17 - Sep 18) and £60 per month at 8% (Oct 18 and onward).

Of course, if I am lucky, I will be earning higher income by then but the point still remains, for people on low income, would these contribution actually mount to anything apart from giving out small pension.

jamesd, that NOW:Pensions look good, but I doubt that my employer will listen to my words as lowly humble worker.

Cheers

Joe

jamesd

JoeCrystal, it may not be worth taking the money. Depends how much your ability to choose appropriate investments is affected and how old you are. Someone with a high risk tolerance who is relatively young could end up better off not taking the extra payments and using their own pension instead.

My view in general is that NEST is the product of choice for employers who want to maximise the number of employees who opt out and indicates a poor attitude to employees by the employer.

dunstonh

My view in general is that NEST is the product of choice for employers who want to maximise the number of employees who opt out and indicates a poor attitude to employees by the employer.

I can understand that point of view and if it is a large employer then you cant really argue with it. However, for small employers with just a handful of staff, NEST is probably the best option...... for the employer.