Paying Extra into NEST Pension?

Littlemisssiwantahouse

Hi - looking for some advice...I have a NEST pension with my job (been in the job a year, only has £500ish in) and an Aegon SIPP from an old job (again less than £1k in). I’ve recently become more focused on saving for retirement and pay 12% into my NEST, employer pays the min 2%.

My question is – should I be paying this 12% into the NEST pension as I’ve heard a lot of negative comments. Although noone contributes to my old Aegon pension would it be more worthwhile paying the extra into this one instead?

If I do stick with paying extra into NEST do you think I should go up to the ‘higher risk fund’? I’m 28 and want to have a solid pension plan before it becomes tougher when I’m older and would then need to pile a higher percentage of my salary in.

Mr.Saver

I don't know much about NEST. My workplace pension is with Aviva, but I found that they don't have a wide choice of funds, so I'm planning to open a separate SIPP instead.

As of fund choice, people have different risk attitude and volatility toleration, you'd need to ask yourself what's your risk attitude first. I'm about the same age as you, and I believe that 40ish years is a very long time, so I choose high risk funds for my pension portfolio.

I saw your other post about saving for a 1 bed room flat. I'm also saving for my first home, but I won't stop or lower contribution made to my pension, because pension has 20% tax relief, and the 20% goes in now or a few years later can make a big different in 40 years.

Littlemisssiwantahouse

Thanks Mr Saver - I'm wondering if it's worth paying extra into my old Aegon work pension or if that's a bad idea?

I'm trying to swot up a bit on pensions as I'm pretty clueless but agree with you that it's best to keep contributing at the same time as saving for a house deposit...I know it will take me that much longer but pension contributions paid in at a younger age will go so much further - it's terrifying seeing articles about the amount you should pay into your pension if you start older! I want to be prepared

Mr.Saver

To decide which pension you pay the extra contributions, you will need to consider the service fees and fund choices and what additional services they provide.

Do you know what fees do they charge you? What additional services (e.g.: managed portfolio, non-independent financial advice or pension advice, etc.) do they provide? What funds are available on their platform? Once you know the answer to those questions, it wouldn't be hard for you to figure out the solution that's best for you.

crv1963

Littlemisssiwantahouse wrote: »

Hi - looking for some advice...I have a NEST pension with my job (been in the job a year, only has £500ish in) and an Aegon SIPP from an old job (again less than £1k in). I’ve recently become more focused on saving for retirement and pay 12% into my NEST, employer pays the min 2%.

My question is – should I be paying this 12% into the NEST pension as I’ve heard a lot of negative comments. Although noone contributes to my old Aegon pension would it be more worthwhile paying the extra into this one instead?

If I do stick with paying extra into NEST do you think I should go up to the ‘higher risk fund’? I’m 28 and want to have a solid pension plan before it becomes tougher when I’m older and would then need to pile a higher percentage of my salary in.

It used to be suggested that a person had to save a % of their salary equivalent to half their age when they started, not sure if that is still the case but as you are 28 and are saving 14% total into pension you seem to have that covered- as long as you maintain that for the rest of your working life.


Next is what platform to choose? With NEST the money comes out before you get your wage, so it's not easy to divert the money or "take a short break" from contributing to pay for something else, unlike paying into a SIPP where it is easy to convince yourself "if I have a break for 6 months I'll catch up later". So until you build up a bigger pot, 50k, 60k, 100k? Why not stick to the methodology you have?


Then the fund? When do you want to retire? If it's SPA then you have 40 years to go so why not 100% equities ride out the ups and downs then review again in your mid 40s? With the timespan you have you are right it is time in the market that counts.


My thinking is apart from fund choice you have it sorted, okay NEST is not perfect, has less funds to choose from but it also is less worry, got money being put away and can be forgotten about while you concentrate on other things. Like saving for a house, possibly in the future children, life etc, while one aspect quietly carries on working in the background.


Every little does help- my wife contracted out of SERPS in the 80s, only a few thousand pounds, forgot about it even being there, stopped contributing, found some old paperwork last year, updated statement arrived this week- she's got 68k saved in it now. Just the power of compounding which shows my point.


Just my thoughts and I hope they help.