NEST pension

moongarden

Hi,

I have been automatically enrolled in NEST where my 'employer' a temp agency will also make a 1% contribution. I already have a SIPP and have been managing my own pension arrangements for the past few years as I haven't been in permanent employment.

I would like to get the maximum contributions from my employer so have sent up NEST so that I pay the minimum in order to get the 1% employer contribution but I am still paying into my SIPP as usual.

My question is, when I leave the current employer will I be able to transfer my pot out of NEST into my SIPP (presuming SIPP provider will accept it).

Many thanks

JoeCrystal

Sadly not. For some reason (likely in order to keep money in.) You cannot transfer out.

SnowMan

You are doing the right thing by picking up the employer contribution, but no you won't be able to later transfer from NEST to your SIPP.

It's hidden away in the literature but see the Key Facts and Mythbuster guide that can be downloaded from the Nest website here.

On page 9 it says

NEST Corporation is not allowed to accept transfers in or pay transfers out except in very limited circumstances

jamesd

You can only transfer out of NEST once you reach 55. Until then you'll be locked into a very limited range of funds at costs that are higher than the best available elsewhere. Even at 55 you can't just transfer, you have to close the plan as well. You can re-enrol after that if your employer allows it, allowing it at least once a year is required by law.

There is a proposal to have smallish pension pots move with employees when they change jobs. It's not clear yet whether NEST will be forced by any resulting law to abandon its policy of locking in its wanting to be former customers for decades.

Whether it's worth getting the contributions paid into NEST depends on your risk tolerance and whether you can bend the investments available to fit within your own planned portfolio of investments. Also on your age - if you'll be 55 soon or already are you can just transfer out periodically. If you're well younger than that you need to judge whether the lost investment potential is worth more or less than the employer contribution.

SnowMan, and of course the people who decides what NEST corporation can do are ... NEST. Cute how they try to make it look as though they don't have a choice about it when it's NEST's own decision not to have transfers out.

SnowMan

The Nest government restrictions on not being able to transfer in and out MAY be addressed in later stages of the Pensions Bill

http://www.professionalpensions.com/professional-pensions/news/2275703/nest-restrictions-to-be-addressed-in-pension-bill-passage

jamesd

Thanks. It'd be good to see. At the moment it's more like a second class personal pension for its intended market. Not really what I want to see for those who already start out with a disadvantage.

SnowMan

jamesd wrote: »

Thanks. It'd be good to see. At the moment it's more like a second class personal pension for its intended market. Not really what I want to see for those who already start out with a disadvantage.

There have been further developments......

And it looks like the plan is for the restrictions on transfers in and out of NEST to be scrapped in 2017 (as well as the £4,500 contribution cap).

http://www.moneymarketing.co.uk/pensions/nests-restrictions-to-be-scrapped-in-2017/1074029.article

The ministerial statement from Steve Webb is here

mania112

Once the dust settles, I will be interested to see numbers in NEST, in alternatives and those that opted out.

redbuzzard

I do think NEST is a mean solution to an admittedly troublesome problem.

On a scale of usefulness from 0 (no pension) to 100 (lowest cost and best choice of investments) it is a lot nearer 100 than 0; but given it is aimed as much at benefitting the general taxpayer, by substituting for benefits in later life, as improving members' incomes in retirement, it should at least have been at the supercheap end of the charges scale.

There is also the possibly unintended consequence in some firms that the only pension on offer to some employees will be NEST, where a much better scheme was on offer previously.

And I don't suppose I'm the only person to wonder whether we should have a mandatory, government-run, fully funded pension scheme with standard contributions from the employer and employee, geared to providing a liveable income in old age. We could call it something like "National Insurance"?

Picking up on mania112's last comment, I think, and hope, that when the dust has cleared NEST can evolve and improve.

SnowMan

The Government document response mentioned in the ministerial statement titled

Supporting automatic enrolment: government response to the call for evidence on NEST constraints

is now available on the gov.uk website here.

JoeCrystal

Ah excellent. In that case, I will contribute into NEST to take advantage of Employer's tiny contribution. Once we get to 2017, I will transfer the NEST fund into my personal pension fund and repeat them yearly.

I am looking forward to see what my employer will come up with. It is due to start soon and already they are looking for a temporary pension administrator to set up everything from processing opt-out forms to setting up the whole things. I got a feeling that they believe that everyone will opt out, thus just a temporary job.

Cheers,
Joe