NEST Pension Higher Risk Fund

0live

Can anyone advise whether it would be worth my while transferring my pension from the NEST Retirement Date Fund to the Higher Risk Fund? I retired from the NHS at 60, took my NHS pension and then returned to work on a part time basis. On returning I was enrolled into the NEST pension scheme. Calculation reveals that my employer matches 75% of my monthly contributions which hover around the £25 mark depending on how much I earn, which varies. My retirement date for state pension purposes is early 2026, so another four years left to run. I'm not relying on my NEST pension to help fund retirement as I didn't expect to be enrolled in another scheme, so can afford to lose some of it with a 'gamble', but would like to know if four years will be enough time to potentially see good returns from the higher risk fund? Currently the pot value stands at around £1200 after eighteen months membership, so not a lot to write home about. Along with changing funds I'm also considering making additional voluntary contributions from my savings which are languishing in an account paying around 1% interest, would this be a sensible thing to do? And if so would it be better to stick with the Retirement Date Fund? As you can probably tell, I'm no financial expert! Thank you.

Dazed_and_C0nfused

Others will no doubt comment on the fund choice but you should be aware that Nest have a high initial charge of 1.8%.

0live

Dazed_and_C0nfused said:

Others will no doubt comment on the fund choice but you should be aware that Nest have a high initial charge of 1.8%.

Thank you - I had forgotten about that!

Albermarle

The Higher risk fund  could be a better choice if you intend to leave the money invested for some years . Four years is a bit on the short side . The longer you leave it the longer it has to ride out any ups and downs in the market.
It is also worth noting that the Nest higher risk fund is not actually that high risk , with about 70% equities , so in a way that makes it more suitable than if it was 100% equities .
You could also have a look at the ethical fund . Although classed as slightly less risky , it has performed better over the last 5 years . Although of course with investments 'past performance is not a guarantee  of how they will perform in future' .

draiggoch

If you are not going to be relying on it for income then I would say go ahead and choose a higher level of risk. You can always leave it invested past 2026 and choose to take it when the markets are higher.
Will your employer increase their contribution if you increase yours or is it a fixed percentage? This way you could live on savings and pay more of your earnings into the pension as the higher employer contribution will make the 1.8% initial charge less of an issue.

Albermarle

0live said:

Dazed_and_C0nfused said:

Others will no doubt comment on the fund choice but you should be aware that Nest have a high initial charge of 1.8%.

Thank you - I had forgotten about that!

However their ongoing charge of 0.3% is very low , so it probably balances out in the end .

0live

draiggoch said:

If you are not going to be relying on it for income then I would say go ahead and choose a higher level of risk. You can always leave it invested past 2026 and choose to take it when the markets are higher.
Will your employer increase their contribution if you increase yours or is it a fixed percentage? This way you could live on savings and pay more of your earnings into the pension as the higher employer contribution will make the 1.8% initial charge less of an issue.

That certainly would be creative accounting! I don't imagine my employer offers a range of contribution rates but it's worth investigating, thanks for the suggestion.

Albermarle

0live said:

draiggoch said:

If you are not going to be relying on it for income then I would say go ahead and choose a higher level of risk. You can always leave it invested past 2026 and choose to take it when the markets are higher.
Will your employer increase their contribution if you increase yours or is it a fixed percentage? This way you could live on savings and pay more of your earnings into the pension as the higher employer contribution will make the 1.8% initial charge less of an issue.

That certainly would be creative accounting! I don't imagine my employer offers a range of contribution rates but it's worth investigating, thanks for the suggestion.

It is quite common for employers to increase their contribution %( to a point ) if the employee increases theirs .
On the other hand some employers only pay the minimum 3% in any circumstances .