Auto Enrolment question

TomBridges

Hi,

My employer has to join a pension scheme from April and has chosen NEST.

Currently my employer pays into my BestInvest SIPP.

My employer has given us the option of opting out of NEST, and either joining a different scheme of our choice, or returning to our current schemes.

My instinct is to opt out and return to paying into my BestInvest SIPP as the NEST scheme looks pretty poor from a fee point of view.

Anyone got any "this is not advice" advice?

Thanks,
Tom

dunstonh

Will the employer pay the same amounts into the scheme of your choice?
Will the scheme of your choice accept contributions knowing that you are an opt out? (many will not)

TomBridges

Employer is happy to pay in the same amount into any Pension Scheme. They have never run a company scheme before and have always paid into whatever scheme an employee has chosen.

I've never read anything about BestInvest not accepting contributions because of opting out.
Edit: having called BestInvest, they said there is absolutely no reason why I couldn't opt-out and continue to pay into my SIPP.

bowlhead99

If the employer is happy to give you the same amount of money into any private scheme you want, it would be better for you to take that money into your own scheme that you're happy with, rather than building up a NEST pot. Whether that be a SIPP or some other kind of personal pension from an economical mainstream provider.

Nest is a 'last resort, does what it needs to, to qualify as a simple option for employers with tiny pension schemes who have never been bothered to offer one before' kind of scheme. It is not going to have the best range of investment returns.

If the employer will still give you the cash no matter where you go, the only advantage of Nest is that with 50,000 options inside your own SIPP you could decide it would be a great idea to invest all the money into a company that goes bust, or a fund that performs absolutely terribly because it was a super high risk niche option. Nest does not let you make those mistakes. If you are not going to make those mistakes it will be better not to have used Nest, imho.

"this is imho and not advice"

TomBridges

Hi,

Thanks for that. Yes my employer is happy to pay into whatever scheme I chose.

My money is invested in the BestSIPP using the Managed Portfolios, so my money isn't in a single company or sector.

I think I'll stick to where I am.

Thanks,
Tom

dunstonh

I've never read anything about BestInvest not accepting contributions because of opting out.
Edit: having called BestInvest, they said there is absolutely no reason why I couldn't opt-out and continue to pay into my SIPP.

It is something that some providers do. It is a compliance issue and firms interpret things differently. It comes about as the regulator added opt-outs to the pension transfer specialist requirements and put a statement about duty of care on all parties involved (so includes providers). Most have interpreted it in respect of transfers only but some treat it as any business that falls under that classification.

All providers will accept business from opt outs but some will insist on advice first. You can usually spot them as they ask on their application if you have opted out of your workplace scheme. In your case, not an issue.

Employer is happy to pay in the same amount into any Pension Scheme. They have never run a company scheme before and have always paid into whatever scheme an employee has chosen.

You will need to keep an eye on it. Unlike an auto-enrolment scheme, the mechanisms are not in place to make changes automatically to the amount paid. So, if amounts paid are variable due to bonus, overtime, pay increases etc you will not get these automatically on your plan but those on auto enrolment schemes will.

LHW99

Also I think your employer has to re-enrol you every so often (?three years) so you need to keep an eye out for that paperwork and re-opt out if you still want to.