Workplace pension or private?

JustAnotherSaver

With the minimum we have to pay in being 1% at the moment, I am with NOW Pensions paying in an additional 9% to make 10% whereas my wife & sister are with NEST paying in the minimum of 1% but would like to pay in more.

I was told maybe late on last year on this forum regarding paying in extra that either NEST charge whereas NOW don't for extra payments in or that NEST charge more than NOW, i can't remember which it was that I was told.

All 3 of us also pay into a S&S ISA. My wife & I are with Old Mutual Wealth through an IFA whereas my sister is with Hargreaves Lansdown on her own but will be going through an IFA later in the year.


So really the point of this thread is that they are wondering about paying in extra to a pension but with the charges NEST has that i was told about they were wondering if it'd be better to pay their extra into their NEST workplace pension or whether it'd be better to open up a new private pension (probably would be IFA managed or at least discussed with an IFA) & pay the extra into that.

Note: Neither employer will pay anything above the minimum, so there's no matching going to happen to their workplace pension.

xylophone

https://www.nestpensions.org.uk/schemeweb/NestWeb/public/members/contents/costs-and-contributions.html

JustAnotherSaver

xylophone wrote: »

https://www.nestpensions.org.uk/schemeweb/NestWeb/public/members/contents/costs-and-contributions.html

So, they take 1.8% of every contribution that goes in as well as an additional 0.3% of the entire pot once per year.

I don't really know how this stacks up vs other options (although the workplace pension side of things is limited to whatever the employer decides to select) but more than that i don't know how that stacks up vs private pensions really. Is that expensive, cheap, the average rate?

xylophone

Have a look at the chart here

http://www.moneysavingexpert.com/savings/cheap-sipps

For myself I'd pay in the basic amount to NEST to get the employer contribution and start a personal pension/SIPP.

bigadaj

JustAnotherSaver wrote: »

So, they take 1.8% of every contribution that goes in as well as an additional 0.3% of the entire pot once per year.

I don't really know how this stacks up vs other options (although the workplace pension side of things is limited to whatever the employer decides to select) but more than that i don't know how that stacks up vs private pensions really. Is that expensive, cheap, the average rate?

It's pretty expensive, a good aim would be around 0.5% total cost.

Cavendish offer a number of pensions from large insurers that are around that level, have a look at their website.

zagfles

bigadaj wrote: »

It's pretty expensive, a good aim would be around 0.5% total cost.

Cavendish offer a number of pensions from large insurers that are around that level, have a look at their website.

It's only expensive in the early years when the pot is quite small anyway. Over a working life the NEST initial/annual charge is a lot cheaper than a pension charging 0.5%pa with no initial charge.

JustAnotherSaver

Wow that's a head fry.

I know nothing about this area at all & they know even less than I do.

If they did decide to go down the private pension route then it wouldn't be getting online & doing it themselves as like myself they have zero confidence in doing it solo. Sure anyone could pick anything but anything isn't necessarily a good thing. They'd very likely go down the IFA route.

If that makes a difference.

bigadaj

zagfles wrote: »

It's only expensive in the early years when the pot is quite small anyway. Over a working life the NEST initial/annual charge is a lot cheaper than a pension charging 0.5%pa with no initial charge.

You're saying nest is a good deal without employers contributions?

zagfles

bigadaj wrote: »

You're saying nest is a good deal without employers contributions?

I'm saying 1.8% initial charge and 0.3% annual charge is cheaper than zero initial and 0.5% annual charge, assuming the investment timescale is 10+ years.

bigadaj

zagfles wrote: »

I'm saying 1.8% initial charge and 0.3% annual charge is cheaper than zero initial and 0.5% annual charge, assuming the investment timescale is 10+ years.

So that's a no then?

Think I know where my money is going.

zagfles

bigadaj wrote: »

So that's a no then?

Think I know where my money is going.

You claimed NEST is "pretty expensive, a good aim would be around 0.5% total cost". You are wrong. NEST is in fact cheaper than your "aim" if you're investing over a few decades, as pensions tend to be. That was what I was saying.

Obviously there are other issues like investment choice etc, personally I want more control over my investments. But for someone who doesn't, NEST could be a good option. Even without employer contributions.