Opting out of Nest ( before joining).

Fly100

Hello all,
Hoping you can give me a few pros and cons for the proposal below. I agree its potentially not ideal, but reading about Nest I understand it has its shortfalls. So scenario is I have been offered another job, and happily they are doing as much as they can to get me to come over. So its usual deal of Pay , Holidays , Car, Pension etc.The current scheme they offer is a 5% Nest and I would contribute my own amount ( probably 12% ), however I have read some not so great stuff about Nest. That said he has offered the option for me to Opt out and paying into my own Sipp ( Vanguard.) This would mean a 5% increase in Salary. Now I understand I would pay tax and NI on this increase however I would get 20% back from the Government when I make my own deposit into my current Vanguard Sipp. The amounts would remain the same 17% ( increasing). I also understand the temptation not to pay into the Sipp, however I am very Pension committed as Id like to finish a little earlier than the State age,
Im sure there is multiple things Ive not thought about and thing I would never consider. As ever many thanks for all Feedback.
Fly

Marcon

How about trying for the jackpot: negotiating a deal whereby your whole pension contribution is paid by salary sacrifice, giving you (and the employer) an NI saving?

hugheskevi

The proposal appears to be a breach of automatic-enrolment legislation. The Regulator gives a clear-cut example of a breach on page 10:

The employer tells their jobholders/entitled workers in an email to them that they should opt out of, or leave, their pension scheme, and if they do they will receive any of the following: • A higher salary level

dunstonh

but reading about Nest I understand it has its shortfalls.

Nest has no shortfalls that make it sensible to opt out.

, however I have read some not so great stuff about Nest.

In which case, change your reading sources.

That said he has offered the option for me to Opt out and paying into my own Sipp ( Vanguard.) 

have you checked to see if Vanguard will accept you as an opt out?  Some providers will not.

AlanP_2

You could mix & match - NEST at employers 5% plus whatever minimum you need to contribute with the balance of your personal contribution going in to a SIPP.

grumiofoundation

Fly100 said:

Hello all,
Hoping you can give me a few pros and cons for the proposal below. I agree its potentially not ideal, but reading about Nest I understand it has its shortfalls. So scenario is I have been offered another job, and happily they are doing as much as they can to get me to come over. So its usual deal of Pay , Holidays , Car, Pension etc.The current scheme they offer is a 5% Nest and I would contribute my own amount ( probably 12% ), however I have read some not so great stuff about Nest. That said he has offered the option for me to Opt out and paying into my own Sipp ( Vanguard.) This would mean a 5% increase in Salary. Now I understand I would pay tax and NI on this increase however I would get 20% back from the Government when I make my own deposit into my current Vanguard Sipp. The amounts would remain the same 17% ( increasing). I also understand the temptation not to pay into the Sipp, however I am very Pension committed as Id like to finish a little earlier than the State age,
Im sure there is multiple things Ive not thought about and thing I would never consider. As ever many thanks for all Feedback.
Fly

By doing this you are throwing away the (free) employer contributions. This will be far greater than the initial 1.8% charge for contributions to NEST (guessing that was one of your issues with NEST?). 

Why not just do as suggested and contribute the minimum to get maximum employer contributions then contribute the rest to SIPP?

When you say this will mean a 5% increase in salary do you mean you will have 5% more take home pay (although in reality only ~3.5%). As opposed to employer offering you a higher salary as posted above by hugheskevi?