NEST - should I quit my stakeholder pension now?

eviex

I have been opted into NEST this month and myself and my employer are making the minimum contributions at the moment.
I took out a Stakeholder pension with Standard Life back in 2001. I took this out myself, not through an employer or using any adviser, I have contributed £50 a month to this since starting it.
I presume it make sense not to opt out of NEST as i have employer contributions via NEST, but should I stop making payments to my Stakeholder pension and instead put more money into NEST or keep contributing to both? I do intend to increase the amount i contribute but just want to know where i should put my money?

Cant seem to find much advice on this other than an article from a year or two ago saying NEST would kill Stakeholder pensions.

kidmugsy

The trick is to contribute in such a way as to maximise the amount of money you "harvest" from your employer into your NEST pension. So keep an eye on what's on offer there.

What to do with your Stakeholder is almost a different question. There may be more modern pension options you could transfer into that would offer you lower charges, or a wider range of investment options. Can you tell us the current annual charge by Standard Life. 1% perhaps?

atush

Agreed. You need to compare the charges and investments available in both pensions. And perhaps consider a thrid way-0 ie transferring your stakeholder.

Nest pensions usually start out fairly low, as little as 1% matched. But will grow in % contribs later. Always make sure you put in the amount needed to get the maximum in employers contributions you can get. Then put more into some pension, somewhere, that you can afford.

Bearing in mind, you need a cash emergency fund and to pay off expensive debt.

eviex

Yes Standard Life charge 1% fee.
I am work for a small business and am certain my employer would only ever contribute the minimum amount he has to, to my pension (although obv if i move jobs that could change).

kidmugsy

eviex wrote: »

Yes Standard Life charge 1% fee.
I am work for a small business and am certain my employer would only ever contribute the minimum amount he has to, to my pension (although obv if i move jobs that could change).

Yes but the minimum he's required to contribute will rise over time.


The minimum you pay:
0.8% of your ‘qualifying earnings’ rising to 4% by 2018

The minimum your employer pays:
1% of your ‘qualifying earnings’ rising to 3% by 2018

The government pays:
0.2% of your ‘qualifying earnings’ rising to 1% by 2018

Source:
https://www.gov.uk/workplace-pensions/what-you-your-employer-and-the-government-pay

As for Standard Life, check whether your policy has any advantages you'd lose on transferring. Check their charges: I understand there should be none for transferring a stakeholder. Then it's a question of finding a cheaper provider. You could begin by checking Cavendish Online.

eviex

Advice appreciated (taken me a while to get them as my broadband was down) - all seems much clearer now, basically keep a hold of my NEST as my employer will contribute and look around for the best pension to complement it. Thanks for the Cavendish online tip, I am considering moving my stakeholder pension to them once I check out if I have any penalties that outweight the benefits as their costs are definitely lower than my stakeholder.


MUCH APPRECIATED THANKS !

andrewthomas2008

This question is not specifically related to the main question, but it's about NEST, I'd like to know who provides NEST with your details, such as your date of birth, is it your employer or the HMRC?

Does anyone feel it's worth contributing to this scheme?

jamesd

andrewthomas2008, your employer is required by law to provide the details, just as they are required by law to auto-enrol employees within the income requirement.

The answers to eviex's questions cover your questions as well:

eviex wrote: »

I presume it make sense not to opt out of NEST as i have employer contributions via NEST

Right, it's worth taking the employer money.

eviex wrote: »

should I stop making payments to my Stakeholder pension and instead put more money into NEST or keep contributing to both? I do intend to increase the amount i contribute but just want to know where i should put my money?

Avoid NEST for the rest because:

1. It has limited investment options.
2. It is currently prohibited to transfer out until you're aged 55 or older. Irrelevant if you are already 55.
3. You may be able to get comparable investments more cheaply elsewhere.

Because of the restrictions NEST is more of a last resort option while others offer a good deal broader range of investment options.

Stakeholder pensions are mostly not great these days. they were OK when originally introduced but the market has moved on since then and these days a normal personal pension can be had more cheaply than the stakeholder guaranteed pricing. It's OK to add more to the stakeholder while you shop around, though, but after that you'll probably find it makes sense to transfer the stakeholder to a personal pension.

Stakeholder pensions used to be the option often offered by employers who didn't want to offer a pension but had to by law. With no employer contribution needed, they just had to offer something. NEST probably will replace this use of stakeholder pensions, becoming the choice for employers who don't care but have to do something. For other uses they were already usually not a good choice.

dunstonh

I'd like to know who provides NEST with your details, such as your date of birth, is it your employer or the HMRC?

Your employer does based on what you have told them.

Does anyone feel it's worth contributing to this scheme?

free money vs no free money. Do we really have to answer what is best?

Retyre

Stakeholder pensions are mostly not great these days. they were OK when originally introduced but the market has moved on since then and these days a normal personal pension can be had more cheaply than the stakeholder guaranteed pricing. It's OK to add more to the stakeholder while you shop around, though, but after that you'll probably find it makes sense to transfer the stakeholder to a personal pension.





James please let me know where I can find a personal pension with lower charges than Standard Life's Stakeholder 1% (or 0.9% with a transfer in)



Thank You

dunstonh

James please let me know where I can find a personal pension with lower charges than Standard Life's Stakeholder 1% (or 0.9% with a transfer in)

Most of the basic ones and nearly all personal pensions.