Transfering into NEST

dunstonh

'm an unlucky one but I could have opted out if I was aware of the high charges at the time.

It would be silly to opt out as you would miss out on the "free money".

I've read that you cannot transfer out but also read that their charges are no where near the cheapest yet no where near the dearest either.

Correct.

Also read that nest will be one of the biggest if not the biggest Pension Provider and estimates it will have between 3.5-5 million investors.

NEST is likely to be made up of very small fund values but high volume. If you measured it in terms of value of funds, I cant see it coming close to the mainstream providers.

Aviva currently has over two million pension customers (before Friends Life merger). NEST had about 1.3m in June 2014 (taken from 10th July report). So getting close. Aviva has about £240 billion under management (all wrappers). Nest has £160 million. I cant find the breakdown of pension only for Aviva but it doesnt really matter as multi-wrapper platforms is the way things are going and NEST is single wrapper. NEST will need to have some pretty stunning IT development to maintain a high volume, low value customer cost effectively. If they have 1.3 million customers and only £160m under management, that is an average fund value of £123.

With the changes in pensions, the big providers are going to be going all out for pension funds at retirement and the generational pension funds that get passed on. The likes of NEST and NOW dont have any chance of competing with that market and that is where the real value is going to be.

The likes of NEST and NOW are basic options offered by employers who want basic options for staff members, the bulk of whom want a basic option. They fit the needs of most small employers where the big guns have little interest in providing to them as they are not profitable.

Saddler1975

dunstonh wrote: »

It would be silly to opt out as you would miss out on the "free money".



Correct.



NEST is likely to be made up of very small fund values but high volume. If you measured it in terms of value of funds, I cant see it coming close to the mainstream providers.

Aviva currently has over two million pension customers (before Friends Life merger). NEST had about 1.3m in June 2014 (taken from 10th July report). So getting close. Aviva has about £240 billion under management (all wrappers). Nest has £160 million. I cant find the breakdown of pension only for Aviva but it doesnt really matter as multi-wrapper platforms is the way things are going and NEST is single wrapper. NEST will need to have some pretty stunning IT development to maintain a high volume, low value customer cost effectively. If they have 1.3 million customers and only £160m under management, that is an average fund value of £123.

With the changes in pensions, the big providers are going to be going all out for pension funds at retirement and the generational pension funds that get passed on. The likes of NEST and NOW dont have any chance of competing with that market and that is where the real value is going to be.

The likes of NEST and NOW are basic options offered by employers who want basic options for staff members, the bulk of whom want a basic option. They fit the needs of most small employers where the big guns have little interest in providing to them as they are not profitable.

Very True.

jamesd

NEST is OK if your employer gives you no choice about it. It's not worth losing the employer contribution. It's also possible that even as soon as late 2015 the restriction on individuals transferring out might be lifted, with it very likely to go away in 2018 if not before. There's also "pot follows member" legislation planned that could make smaller NEST pots by default go to new work schemes when an employee changes job.

NEST is the sort of thing that's perhaps ideal for a person who employs a nanny part time and knows little about their obligations beyond that they have to pick some pension scheme. Not all bad but far from the ideal choice for an employer of non-trivial size who cares about their employees.

NEST is itself conducting a review of its investment and retirement options and may end up changing from something I tend to describe as the lemon of the auto-enrolment options.

Since you're in NEST you might check what they have you invested in. Their defaults are pretty nasty, involving putting you in low growth investments at the start and then again way before a presumed purchase of an annuity. If you have even the slightest clue about investing you can do better by telling them where to put your money and turning off their lifestyling. Just pick a global equity fund and accept periodic drops of 20% to 40% as markets do what markets do along the way up long term.

Saddler1975

jamesd wrote: »

Since you're in NEST you might check what they have you invested in. Their defaults are pretty nasty, involving putting you in low growth investments at the start and then again way before a presumed purchase of an annuity. If you have even the slightest clue about investing you can do better by telling them where to put your money and turning off their lifestyling. Just pick a global equity fund and accept periodic drops of 20% to 40% as markets do what markets do along the way up long term.

Could you simplify this for me?

All I know is that out 6 options that seem to be available I chose the:-

NEST Retirement Date Funds

This is the best option for most NEST members. It aims to make your retirement pot grow faster than the rising cost of living and then focus on protecting your money as you near your retirement date.