NEST Pensions - increasing contributions?

JustAnotherSaver

My sister was showing me her NEST pensions portal as my employers are not with NEST & i was curious how the NEST portal looked.

I noticed 2 things....

* It seems you can only increase your contributions by a money value, not a percentage value - not so good if your pay fluctuates.
* If you want to increase your contribution percentage from the minimum 1% then you need to speak with your employer.


Well my wife is being auto enrolled this month. Actually they were last month but apparently the accountant messed things up.

My wife told her employer that she wanted to increase her contributions as she'd been told (from what i read on my sisters portal) that she needed to inform her employer of this.



Her employer (who is totally against the workplace pension thing & seems to like to remind the employees of this from time to time with various comments) told my wife .......... that they (employer) don't know how to do that & if my wife finds out how then she's to tell her employer who will then get it done.


This was followed with a panic of - i don't have to pay in any more myself (i.e. match) do i?!?!?


To be specific, my wife wants to pay in an additional 4% to make a total of 5% each month.
What does she need to tell her employer (without any sarcastic remarks) that they need to do in order to make it happen?






Would be so much easier if she could do it herself through her own portal (when she gets given the details).

jamesd

It's not really a great move to pay in more than the minimum that gets employer contributions into NEST. They have an initial charge per Pound paid in and not particularly low ongoing charges so she can probably get a better deal somewhere else for the extra.

There is already a scheduled set of increases to the amounts:

Now: 2%: 1% employer, 0.8% employee, 0.2% tax relief.
April 2018: 5%: 2% employer, 2.4% employee, 0.6% tax relief.
April 2019: 8%: 3% employer, 4% employee, 1% tax relief.

Those are based on qualifying earnings which is a lot less than total earnings for low earners. Employers don't have to use qualifying earnings, then can use full earnings if they choose. If trying to save money they will choose qualifying earnings because it's cheapest for them.

JustAnotherSaver

Interesting.

Would you take the same stance regards putting in more than the minimum in to now pensions?

I'm not challenging you here, just wondering what your opinion is because i remember you from a few years ago & you were very helpful.


Back on topic though - she was wanting something percentage related & not amount, so that it just gets invested based on what she earns in the month.

I personally could be anything around £1,200 - £1,800 so quite a range. If it was me & i was to say i want to throw in another £100 then it'd obviously have more impact on me if i had had a bad month that month, but if i was to say x-% then it's the same regardless.

xylophone

Why not simply pay as much into Nest as gets the matched employer contribution and open a private pension for whatever else she wishes to contribute?

dunstonh

NEST is a budget option aimed at small employers who cant get access to the mainstream providers. You wont get all the bells and whistles with it.

The employer is being an idiot. Tell them to pull their fingers out (in a way that doesnt get her sacked)

jamesd

JustAnotherSaver wrote: »

Would you take the same stance regards putting in more than the minimum in to now pensions?

NOW:Pensions doesn't have the 1.8% charge deducted from the amount paid in. The NOW:Pensions fund management charge is 0.3% a year, same as NEST. No restrictions on transferring in or out. So no, no reason for me to have the same stance because it doesn't have the same extra cost and restrictions. If an employee doesn't like it they can pay in, get the employer contributions and periodically transfer out.

dunstonh

According to posters on the NOW pensions thread, they are suffering major administration problems at the moment with many months delay.

JustAnotherSaver

xylophone wrote: »

matched employer contribution

After what i said, it should come as no surprise that her employer is only paying in the minimum that they have to.

dunstonh wrote: »

NEST is a budget option aimed at small employers who cant get access to the mainstream providers. You wont get all the bells and whistles with it.

The employer is being an idiot. Tell them to pull their fingers out (in a way that doesnt get her sacked)

What are the other options for the employer? Not that my wife would be able to get them to change who they go with i guess. Why would they lump with NEST over one of the other options?

jamesd wrote: »

NOW:Pensions doesn't have the 1.8% charge deducted from the amount paid in. The NOW:Pensions fund management charge is 0.3% a year, same as NEST. No restrictions on transferring in or out. So no, no reason for me to have the same stance because it doesn't have the same extra cost and restrictions. If an employee doesn't like it they can pay in, get the employer contributions and periodically transfer out.

Ties in with what an IFA i saw said to me - basically with NOW:Pensions i should pay in as much as i can afford to (my employer also doesn't pay any more than the minimum).

dunstonh wrote: »

According to posters on the NOW pensions thread, they are suffering major administration problems at the moment with many months delay.

I was speaking with payroll recently & they mentioned some of the trouble they'd had with delays.

This also links in with bits i've read online, including from supposed NOW:Pensions employees who were basically slating NOW:Pensions - talking about all these delays.


What would you advise as a wise approach?

Currently i have just increased my contributions with NOW:Pensions to 10% (9% additional + 1% compulsory).
My wife will currently be paying in 1% to NEST.

We both earn about the same & we both also pay a small amount (£100pm each currently, although we're thinking of changing that in the new year) into a S&S ISA that is with Skandia / Old Mutual Wealth (or whatever they're called these days).



I don't really like paying in money values to be honest. So i don't like to say - i will pay in £50 per month for example. I would much prefer to say i will have 10% of my wage automatically paid in, but then i guess this would have to be done at the payroll end & unless it's managed by payroll then i can't see how it could work that way.

dunstonh

What are the other options for the employer? Not that my wife would be able to get them to change who they go with i guess. Why would they lump with NEST over one of the other options?

Most of the insurers want 15+ employees or a certain contribution level. For smaller employers, there are not as many options but there are several. The employer decides which. Some will research. Some will go with the first one they find.

NEST is not profitable and has taken more money from the Govt. NOW is suffering admin problems. The reason the main insurers didnt want to deal with small schemes is that the charges against the premiums are smaller than the costs of administration. So, these providers that deal with the small employers appear to now be suffering from that by either cutting costs and creating bad admin or losing money.

JustAnotherSaver

As far as my wife goes, they'd fall short of the 15+ since there's only about 8-10 of them.
Where i work there's probably 30-40. Not big numbers but more than the 15 you mention.



So am i correct in thinking....

* Since there's not the same charges with NOW:Pensions, i am ok to continue paying in 10%
* but my wife should only pay in her 1% due to the charges with NEST

* and so then any extra she wants to pay in should go in to her S&S ISA instead?


As a side note, we're going to be going with a different IFA come the new year for our S&S ISA management. We're not really happy with the current guy & we spoke with the chap who was fantastic with handling our house purchase but he said that they will be unable to 'take over' handling of our S&S ISA until we had been with the other chap for 5 years (which is this Xmas).


The S&S ISAs we hold are currently with Old Mutual Wealth but i don't know who the new guy will be using.

Plus then there's this LISA next year isn't there. I wonder if we'd be able to or whether it'd be good to transfer our S&S ISA into one of those come the time.

xylophone

See post 4.