N.E.S.T is it worth it

Granville23

I an 56 next year (omg) and will have probably about 11 years paying in to the new pension. I have calculated my self and using the pension calculator on the nest web site and arrived at a total pot of around 11,000.
I can take 25% tax free (£2,750) and will get £500 annually (£40 monthly). This goes down depending if I guarantee this for 5 or 10 years and if I want to increase payments at rate of inflation.

I can't really see that this is worth it. This is assuming that my pay stays the same for the next 11 or so years and I stay with the same company. Having worked permanent nights for last 15 years if I carry on with the same I don't think I will be alive in 11 years. If I do, what is £40 a month going to be worth in real terms, not a lot.

It's seems that I am already in and past the opt out period as haven't received my welcome pack with opt out details and monies payed in will not be returned. Great.

Any opinions would be appreciated

Linton

Granville23 wrote: »

I an 56 next year (omg) and will have probably about 11 years paying in to the new pension. I have calculated my self and using the pension calculator on the nest web site and arrived at a total pot of around 11,000.
I can take 25% tax free (£2,750) and will get £500 annually (£40 monthly). This goes down depending if I guarantee this for 5 or 10 years and if I want to increase payments at rate of inflation.

I can't really see that this is worth it. This is assuming that my pay stays the same for the next 11 or so years and I stay with the same company. Having worked permanent nights for last 15 years if I carry on with the same I don't think I will be alive in 11 years. If I do, what is £40 a month going to be worth in real terms, not a lot.

It's seems that I am already in and past the opt out period as haven't received my welcome pack with opt out details and monies payed in will not be returned. Great.

Any opinions would be appreciated

Have you worked out what you get if you do opt out? Only then can you decide which is best.

As to whether you will be alive in 11 years, from the government life expectancy figures 9% of the people aged 56 today fail to reach 67. That's about the same % expected to reach 100. You could be one of the unlucky ones but its best to plan on living a relative long time. If you are wrong you wont know about it, if you are right you will be happy that you took out a pension.

jamesd

At age 56 you're no longer so badly affected by one of the major negatives of NEST: its ban on transferring out to get better investment choices. If you want, you can transfer out by stopping, transferring and signing up again.

If you want to opt out and didn't receive an information pack please make a complaint to NEST. This is the second case I've seen where someone was signed up and apparently hadn't been given a chance to opt out or NEST. It's mandatory to refund within the opt-out period but it is still possible to refund after that.

You are not required to buy an annuity to get an income. You are not required to wait until you are 67 to take a lump sum or income of both. From age 55 and above any personal pension can be taken and you can use capped income drawdown instead of buying an annuity. If this is all of the pension pot you'll have, income drawdown is likely to be quite marginal on cost grounds.

It is very likely that NEST is choosing to use a poor fund from their range for your money. You should check where your money is being invested and at least pick one of the less bad options, say a FTSE All Share Index tracker.

Since this is NEST it's probably not worth paying in any more than it takes to get any employer matching. If there is no employer matching it's probably best not to use NEST at all, to avoid its high charge on money being paid in and its' not inexpensive ongoing charges.

Standard pension projections give the numbers in today's money. So £2,750 is an amount that would be worth that much today. Same for the income. It is unlikely that you are being given good quotes for annuities for income, compared to the best on the market, and if you have any negative health factors you're almost certainly not. Like quite a lot of providers NEST just offers a tiny section of all annuity providers, but lots of people don't bother to shop around to get a better deal.

Do you have any other work or personal pensions? From age 60 anyone with pension pots worth up to £18,000 in total can take them all as a lump sum.

Granville23

Hi guys thank you for you replies

Jamesd

NEST: its ban on transferring out to get better investment choices. If you want, you can transfer out by stopping, transferring and signing up again.

I'm not sure I understand this, are you saying you can transfer. Also I do prefer the Idea of income drawdown, can I do this with nest. It does annoy me though that I have to pay to remove my money, H&L charges £75.

It seems that there are 3 options to choose regarding investment choices, I didn't notice whether there was an all share tracker. But it seems they move the funds into less risky investments 10 years before one chooses to draw pension, so will not get extra growth there.

I do have another pension with royal London which was started when maggy thatcher decided to let us opt out of SERPS, thats basically got all my Ni contributions from then which from memory is about 30k.

I need to do something with that because I don't think it's getting the best return

Also regarding the Opt out details, I have 4 colleagues at work who have mentioned that they havent received any opt out details, however our manger has got his but I only found that out last week.
I am going to ring up tomorrow and complain

jamesd

Yes, you can transfer a NEST pot once you're aged 55 or older. They don't allow it before that.