Do you trust Nest?

burningmuscles

Hi everyone,

This is my first post on here, and I apologise if I'm treading on already existing threads about this topic.

For a little background, I'm 35 years old, and have been ignorant of any financial realities for most of my life. I ended-up with no money at the age of 33, but now, I have savings in and around the £13,000 mark.

Like any person on the frontiers of new knowledge, I have a few questions. Due to my auto-enrolment in NEST, I'm slightly convinced that with all things being equal, that pensions are my only way to guarantee a happy life for old age.

But as this is 20-30 years away, and since NEST is a government initiative, how secure do you think it is over this time? I simply would hate to have made contributions over and above my pay packet to build-up a nice lump sum - only to see it being taken away, or subverted in any way.

Right now, I'm umming and arghing about making a contribution of a £1000 into a pension to make the most of the tax relief for this year.

Would you recommend NEST for this, or would any other SIPP be more preferable?

Thanks to anyone who can advise,
Steven.

LHW99

Since NEST as an autoenrollment pension is one of several (NOW pensions is another) set up for autoenrollment. If the Government changes autoentollment it won't be just Nest that's affected. As a scheme it is likely to be no less (or more) secure than others.
Before putting money elsewhere, its best to check if your company would pay more in to Nest if you paid more in - never turn down free money

dunstonh

But as this is 20-30 years away, and since NEST is a government initiative, how secure do you think it is over this time?

I have issues over the way NEST is funded. However, there are no concerns over its financial security.

I simply would hate to have made contributions over and above my pay packet to build-up a nice lump sum - only to see it being taken away, or subverted in any way.

That isn't how pensions work...unless you read the Daily Express comments. But those people live on a different planet.

Your money is held within a trust. They only use liquid investments. If NEST fails, your pension is still yours.

Would you recommend NEST for this, or would any other SIPP be more preferable?

NEST is the bottom of the market provider aimed at companies who are too small to use insurance companies for their group schemes. SIPPs are at the opposite extreme. They are aimed at the experienced investor wanting to use more advanced assets not available in workplace pensions, stakeholder pensions or personal pensions.

You do not pick the provider or product type first. You choose how you want to invest.Then you look at the product type/provider. Do you have the knowledge and experience to invest with a SIPP?

SIPPs get lower FSCS protection. How does that fit with your earlier concerns about security?

tacpot12

Good info from dunstonh.

I would trust NEST as home for my pension savings for the reasons already described, and because their investment performance is good. e.g. Annualised total return of their Higher Risk fund (net of annual management charge) is 11.9% pa over the last five years, and 6.6% over the last 12 months, although their Sharia fund is better and would be my choice of investment were I to be enrolled in NEST.

xylophone

Had you considered making additional contributions to NEST?

https://www.nestpensions.org.uk/schemeweb/NestWeb/public/memberhelpcentre/contents/how-can-i-make-additional-contributions.html

burningmuscles

xylophone wrote: »

Had you considered making additional contributions to NEST?

I have, and I do. I currently contribute a small sum each month on top of what goes in from my wages.

But now I'm looking to siphon most of my savings into a pension, considering the annual tax relief would give me a better return in the long run than most fixed savings. But this is where I get cold feet as a £1000 one-off contribution is quite a lot of money to me.

Steven.

kidmugsy

burningmuscles wrote: »

But now I'm looking to siphon most of my savings into a pension, considering the annual tax relief would give me a better return in the long run than most fixed savings. But this is where I get cold feet as a £1000 one-off contribution is quite a lot of money to me.

The great thing with pension saving is that for most people there is no hurry. You'll get your tax rebate whether you're 35 or 45 or 55. (Conceivably you'll get a bigger tax rebate at 45 or 55.)

So if you really want to invest in S&S without tying the money up until you are 55 plus, you could pop it into an S&S ISA. Then at some suitable moment withdraw it and pop it into a pension.

On the other hand if you are leery of adding to your S&S at the moment just keep the money as cash earning the best interest rate you can find. Then reconsider in, say, six months time.

Dox

burningmuscles wrote: »

But now I'm looking to siphon most of my savings into a pension, considering the annual tax relief would give me a better return in the long run than most fixed savings. But this is where I get cold feet as a £1000 one-off contribution is quite a lot of money to me.

£1000 is a lot of money, so the chilly feet are entirely understandable!

NEST is hardly likely to collapse while the kindly taxpayer is still around (see https://www.professionalpensions.com/professional-pensions/news/3009015/nest-s-loan-won-t-be-repaid-until-2038-debt-to-double-in-next-9-years), and even if it did, pension savings are ring fenced.

The much more likely issue with NEST is administrative failings such as allocating money to the wrong person and/or fund. For that reason, it would be very wise to keep an eye on your account (easy to do online) on a regular basis and check that you've been credited with the right amounts at the right time. If there are mistakes, trying to put them right several years down the line will be very difficult (and nigh on impossible where employers have gone out of business, as many small firms will, and nobody has any records).

burningmuscles

kidmugsy wrote: »

The great thing with pension saving is that for most people there is no hurry. You'll get your tax rebate whether you're 35 or 45 or 55. (Conceivably you'll get a bigger tax rebate at 45 or 55.)

Thanks for the reply.

May I ask what you mean in regards to this? How will the tax rebate become bigger? I assumed you get the same tax relief allowance per tax year? And then you can get 25% of the total sum tax free at maturity?

AlanP_2

burningmuscles wrote: »

Thanks for the reply.

May I ask what you mean in regards to this? How will the tax rebate become bigger? I assumed you get the same tax relief allowance per tax year? And then you can get 25% of the total sum tax free at maturity?

I would think it's based on reasonable assumption that a lot of HR taxpayers don't get to that salary level in the first few years of their career so mid 40s to 50s say.