Moving jobs and not sure what to do

JamesWhite19

Hi all,
I hope the group mind may be able to help me with this one! I am about to move jobs and I don't know what to do with my current employers pension (peoples pension) my new employer uses Nest. Do I leave it as it is? Do I merge the old into the new scheme or do I open a SIPP .... for reference I am 38 and there is about 25000 in my current scheme 

Albermarle

All three options you mention are possible, as is doing nothing .
Presumably though you will have no choice but to have the NEST pension with your new employer or you will miss out on their contributions. Employers are usually loathe to pay into other pensions than their own due to extra admin issues.
If you prefer the investment choices in NEST you could transfer the PP in . NEST ongoing charge is ,low at 0.3% but they charge 1.8% on contributions. You would have to check this did not apply to transfers.
If you have some reasonable knowledge of investing you could open a SIPP , but otherwise best to stick with the simpler options.

JamesWhite19

So Looking at the number crunching...
The Peoples Pension
AMC = £2.50
Management charge = 0.25% (reduced as i have 25k in the pot)
Nest
AMC = 1.8% on all contributions
Management charge = 0.3%
---------------------------------------------------------------------------------------------------------
Based on the number crunching and looking at my pension contributions spreadsheet for a chunk of the year (March to July 2020) The peoples pension cost £39 in fees and the equivalent Nest would be £256
I now have a dilemma as I really don't want to be hit with the Nest fees as they are ludicrous. I normally contribute 16% to my pension but based on this I don't want to put in a penny more than the minimum required. I cant not have the Nest pension as I would lose out on the employers 3% contribution.
Any advice? 

garmeg

JamesWhite19 said:

So Looking at the number crunching...
The Peoples Pension
AMC = £2.50
Management charge = 0.25% (reduced as i have 25k in the pot)
Nest
AMC = 1.8% on all contributions
Management charge = 0.3%
---------------------------------------------------------------------------------------------------------
Based on the number crunching and looking at my pension contributions spreadsheet for a chunk of the year (March to July 2020) The peoples pension cost £39 in fees and the equivalent Nest would be £256
I now have a dilemma as I really don't want to be hit with the Nest fees as they are ludicrous. I normally contribute 16% to my pension but based on this I don't want to put in a penny more than the minimum required. I cant not have the Nest pension as I would lose out on the employers 3% contribution.
Any advice? 

If your new employer uses salary sacrifice then I would use their NEST scheme only. If not, use NEST to the bare minimum to get the employer 3% and pay any extra into a SIPP with, say AJ Bell Youinvest, or can you carry on paying into your old peoples pensions scheme on an individual basis?

cobson

As the Peoples Pension use banded charging rates, I think the charge on a £25k pot is 0.36%.

Brynsam

Albermarle said:

All three options you mention are possible, as is doing nothing .
Presumably though you will have no choice but to have the NEST pension with your new employer or you will miss out on their contributions. Employers are usually loathe to pay into other pensions than their own due to extra admin issues.
If you prefer the investment choices in NEST you could transfer the PP in . NEST ongoing charge is ,low at 0.3% but they charge 1.8% on contributions. You would have to check this did not apply to transfers.

NEST does not make a contribution charge on transfers in.

Albermarle

 I now have a dilemma as I really don't want to be hit with the Nest fees as they are ludicrous

Just a bit of context here. Nest ongoing charge of 0.3% for platform and fund is in fact pretty low . The 1.8% initial contribution charge bumps this up a bit, but the effect is diluted over time.

The 'issue ' is that the Personal Pension charges , especially as your pot gets bigger are actually very low indeed.

Cus

Would you be able to partial transfer out from nest to your preferred choice without charge on a regular basis?

JamesWhite19

Albermarle said:

 I now have a dilemma as I really don't want to be hit with the Nest fees as they are ludicrous

Just a bit of context here. Nest ongoing charge of 0.3% for platform and fund is in fact pretty low . The 1.8% initial contribution charge bumps this up a bit, but the effect is diluted over time.

The 'issue ' is that the Personal Pension charges , especially as your pot gets bigger are actually very low indeed.

0.3 is 0.05 higher than the Peoples pension, plus Nest charge 1.8% per contribution on top of that which is basically a 1.8% 'daylight robbery charge' on your pension

Albermarle

0.3 is 0.05 higher than the Peoples pension

This difference is almost meaningless, if you consider that some of the funds could easily drop 300 times that amount in a single day of market volatility.

Picking the correct investments in either pension for your age, circumstances and risk tolerance is much important than the charges , which you are right to look at but they are a secondary issue.

JamesWhite19

/triplea35 said:

I have checked and confirm the annual management charge on your £25k pot with PP would be 0.36% (£90) compared with  .3% (£75)  in Nest ( No Contribution Charge on Transfer)  So the £15 saving will help a little to offset the 1.8% contribution charge on future work contributions which you cant really avoid.
I have recently done the opposite with my sons pension as his new employer is with PP though fortunately as his pot is £80k it brings the amc to .27% so cheaper than Nest. Transfers to and from Nest have all gone very smoothly if a little slow.
More importantly I would give some serious consideration to your fund selection.

I have no idea when it comes to fund selection, everyone I have ever mentioned that to just leaves it on the default...... any suggestions? I am leaning towards paying 5% Salary in to NEST And 10% in to people’s separately so that plus the 3% employers into nest plus the 20% tax back I am hoping that should be enough going in to pensions.  

Peoples is .25% if you have 25-50k invested not .36 (“over £25,000 and up to £50,000, we’ll give back 0.25%”)