NOW Pensions: bad news? Stay away?

Not_Me_Officer

In this case I will need to speak with payroll department to clarify how exactly the money is taken, paid in, any delays etc.


To my knowledge (until I have that discussion), the money is taken out of our pay (we are paid in the middle of the month) & would be invested straight away.


We were told (if I remember right) that we're paying in 1% as is the company. At no point (if I remember right) were we told that we were actually only paying in 0.8% where the tax relief of 0.2% would bump us the employee to 1%. I pay in an additional 4% to round off my contributions to 5% for the time being.


Month 1: £12.53
Month 2: £10.81
Month 3: £14.48
Month 4: £10.91 + £43.65 voluntary
Month 5: £11.15 + £44.58 voluntary


Those are the figures showing up on my payslip & as I said - we are paid in the middle of the month.


Again, I'm not saying my employer is not paying in. After reading those google reviews I see employers actually complaining that NOW Pensions aren't taking their contributions, so if it can happen to others then it can happen to mine.


Logging in to see what it says about charges....

Management Charges:


Admin charges £1.50 per month (or £0.30 per month if you earn less than £18k per year). Investment charge 0.30% per year of your fund.

Under contributions it states...

You contribute 1.00% + Employer contributes 1.00%
Additional voluntary contributions 4.00%

Fund value: £137.50 effective of 24/03/2016.




Does this info help any?

kingrulzuk

This is one of the reason why I have opt out of company workplace pension.

bigadaj

OP - I wouldn't personally contribute more than the minimum to the nest pension. It's not particularly good and inflexible, take what you can by getting the employers contribution and I would then invest elsewhere.

If you are a basic rate taxpayer without salary sacrifice then pensions aren't a great bonus, I'd make sure there is a good emergency fund in high interest paying current accounts, look at the main site and savings and investments or banking boards for suggestions. I'd then be using my Isa allowance in stocks and shares, for added flexibility.

Not_Me_Officer

kingrulzuk wrote: »

This is one of the reason why I have opt out of company workplace pension.

And why is that?


Because the numbers didn't stack up? Your employer wasn't paying in when they should? The pension organiser (or whatever the correct term is) wasn't taking money from your employer when they should've? Because you didn't understand why things didn't seem right?


What was your reason?


I'm not saying your stance is correct or incorrect. It's obviously right for you. I was just lead to believe that if your employer was paying in to your pension then jump on it as it's free money.

Not_Me_Officer

Just working through some emails I got when this was set up & I saw this...

The payments into your pension fund will be:

• Your contribution - 1.00% of your pensionable earnings. This will be taken directly from your pay before tax is calculated.
• Your employer will also contribute 1.00% of your pensionable earnings.
• In the Plan, tax relief goes into your pension immediately as your contributions are deducted from your earnings before tax is calculated. Tax relief means some of your money that would have gone to the government as tax now goes into your pension instead. This means you don't need to do anything to get the tax relief paid into your pension. It will happen automatically.

Does that read to you that I'm paying 0.8% & tax relief bumps it to 1% or am I paying 1% & tax relief bumps it to 1.2%?


Like I said, I'm not bothered about paying 0.2% over what I'm supposed to if that's the case.

dunstonh

Does that read to you that I'm paying 0.8% & tax relief bumps it to 1% or am I paying 1% & tax relief bumps it to 1.2%?

It says neither of those things. It says you pay in 1% before your gross pay is taxed.


If your pay was £500 then 20% tax on that is £100 and you take home £400.

With the pension contribution being taken off before tax, your pay is £500. Minus £50 for pension. £450 is then calculated for tax which is £90 and you take home £360. (£360 plus £50 = £410 - £10 difference is your tax relief)

Effectively, you are paying a gross amount into the pension and taking home the tax relief via your payslip.

Paul_Herring

Not_Me_Officer wrote: »

Your contribution - 1.00% of your pensionable earnings. This will be taken directly from your pay before tax is calculated. .

Since they've specifically mentioned it, note that "pensionable earnings" need not be the same as "gross pay before deductions".

https://www.nestpensions.org.uk/schemeweb/NestWeb/public/helpcentre/contents/what-are-qualifying-earnings.html

And as previously pointed out, this is effectively salary sacrifice; its 1%of the gross (of pensionable earnings).

Whatever's left after that's deducted then gets manhandled through the income tax and national insurance calcs.

It was never taxed, so cannot attract tax relief.

snowqueen555

The last few months have been terrible for investments since January 2016, I am not surprised your pension is down if you only started some 4-5 months ago.

Thrugelmir

bigadaj wrote: »

If you are a basic rate taxpayer without salary sacrifice then pensions aren't a great bonus,

Tax relief is a bonus. Salary sacrifice isn't available to everyone.

dunstonh

snowqueen555 wrote: »

The last few months have been terrible for investments since January 2016, I am not surprised your pension is down if you only started some 4-5 months ago.

Or in the case of long term regular contributions, it has been a great time.