Do I need to open a SIPP alongside my NEST workplace pension?

mole_man

Hello all! I have been trying to make a decision on what is best to do with my pension.

I (32m) am currently enrolled into a NEST workplace pension and have been for the several years now. I have set it to be invested in the ethical fund.

Each month, I contribute 14% and my employer contributes 3%. My employer will not offer salary sacrifice or any increase to their contributions beyond 3%. I do get 1 or 2 bonuses per year which, on top of the 3%, is not too bad!

I am a basic rate tax payer. My question is, because of the lack of salary sacrifice and the 1.8% NEST charges on each contribution, should I look to drop my contributions down to 5% with NEST and pay more into a SIPP with Vanguard?

I do not know if I am doing the right thing by contributing so much into NEST and was wondering how other people have approached this?

Many thanks for your help and feedback!

atush

I would say yes, if the Vanguard charges are lower, and i am sure they are.
1.8% charges is high.

Marcon

atush said:

I would say yes, if the Vanguard charges are lower, and i am sure they are.
1.8% charges is high.

The 1.8% is a contribution charge, not an AMC, so for younger members of NEST the benefit of lower ongoing charges might outweigh the chomp NEST takes out of each contribution - but I agree, it's still high, so anyone in an older age bracket should certainly think twice about voluntarily paying more to NEST.

Albermarle

more into a SIPP with Vanguard?

Could be a good idea, but be aware there are a lot more SIPP providers than Vanguard.

triplea35

No initial contribution charge for pensions transferred into Nest so just the .3% annual management charge. I wanted to help my son with some significant contributions to his Nest pension so just put the money into a SIPP over a few years and then transferred it into Nest. The .3%amc is very competitive as it includes both the the platform charge and the fund fee. 

dipsomaniac

Are you able to make regular transfers from your nest pension to your SIPP? Not sure if costs (if any) would out way benefits

mole_man

Albermarle said:

more into a SIPP with Vanguard?

Could be a good idea, but be aware there are a lot more SIPP providers than Vanguard.

Good point. I will have a look around at other providers such as AJ Bell and Hargreaves Lansdown etc. to see how they compare.

mole_man

dipsomaniac said:

Are you able to make regular transfers from your nest pension to your SIPP? Not sure if costs (if any) would out way benefits

I do not think this is possible without Nest closing your pension? I think my plan is to transfer everything from Nest into the SIPP when I change jobs.

Albermarle

Picking SIPP providers is a bit like horses for courses , they all have a little bit of a different offering .
The Big Four are HL, Interactive Investor , Fidelity and AJ Bell . Vanguard are relatively new to offering SIPPS bur are popular.
Iweb is a low cost option.+ there are others .
Compare the UK's cheapest online brokers - Monevator

mole_man

Albermarle said:

Picking SIPP providers is a bit like horses for courses , they all have a little bit of a different offering .
The Big Four are HL, Interactive Investor , Fidelity and AJ Bell . Vanguard are relatively new to offering SIPPS bur are popular.
Iweb is a low cost option.+ there are others .
Compare the UK's cheapest online brokers - Monevator

Thank you for the information! I guess I mentioned Vanguard because I plan to transfer my S&S ISA to them in April. I will have a look at the link you provided and see which one suits me best!