NEST or State pension contributions

Showqa

Hi there - I've been made redundant from my main job (I have two) and that employer was paying into NEST for me as a workplace pension.

If I were to choose to make voluntary contributions to either NEST or the state pension, which would be best?

I'm looking at  travelling for a year with a view to finding some work overseas, and hence won't have contributions made to my state pension either.

I'm 50, and I currently have only 20 years of State Pension contributions, so of course I want to maintain one or other but can't afford both.

Thanks.

Dazed_and_C0nfused

Unless you are an investment genius State Pension will almost certainly give the better return.

Have you checked your State Pension forecast on gov.uk, reading it in full?

Buying a years NI is almost certainly going to add £5.29/week to your forecast.  And this will be inflation proofed via the double/triple lock.  And it will be payable from your State Pension age for as long as you live.

A key consideration once you've checked your forecast is would you reach the maximum anyway.  If so it's a waste of money but if not and it buys you £5.29/week then it's a great investment.

When checking your forecast don't forget that you may have already accrued one extra year, 2021:22, which won't have been added to your forecast yet.

Showqa

Thank you so much for this information. I'm pretty dim when it comes to such matters.

Tranboy

People go on about nest being free money from your employer,  even our martin lewis extolls its virtues but have a google about and see what others say about it. The charge is lower than some pensions but they take a yearly percentage off the top. I can see in a few years time the state pension scheme being means tested so best to make sure you get your full 35 years paid up rather than other schemes. My own personal opinion which others will no doubt disagree with.

Albermarle

Buying extra qualifying years to get up to a full state pension is an absolute bargain. Before doing anything though speak to these people .
Contact the Future Pension Centre - GOV.UK (www.gov.uk)

Albermarle

Tranboy said:

People go on about nest being free money from your employer,  even our martin lewis extolls its virtues but have a google about and see what others say about it. The charge is lower than some pensions but they take a yearly percentage off the top. I can see in a few years time the state pension scheme being means tested so best to make sure you get your full 35 years paid up rather than other schemes. My own personal opinion which others will no doubt disagree with.

If your employer contributes to a pension for you ( and they have to nowadays in most circumstances) , it does not matter if the pension provider is NEST , or any other provider , it is still free money.

The charge is lower than some pensions but they take a yearly percentage off the top. 
Nearly all pensions charge an annual management %, not just NEST  . The 0.3% with Nest is cheap as it also includes the investment fund charge. However each new contribution is charged as a one off 1.8% . This initial charge is pretty unique to Nest .

Picking the right investment fund for your circumstances within a pension , is much more important than who the pension provider is, or a difference in charges of just 0.1 or 0.2%

I can see in a few years time the state pension scheme being means tested so best to make sure you get your full 35 years paid up rather than other schemes.

You are right that getting a full state pension is a priority . However it is not so simple as just 35 years . The best way is to check the forecast and if it looks like a full state pension will not be reached , then contact the Future Pension centre via the link in the previous post . They will be able to say exactly what needs to be done.

Tranboy

The reviews on trust pilot if they can be believed for nest are somewhat critical about being able to withdraw and transfer your pension money.  Someone on there pointed out that with their  1.8% and 0.3 % charges on the % of your wages you pay in only 0.9% actually goes to your pension in addition to the employer 3% and government 1%. For those in their later years 50+ the charges are proportionately greater especially if you transferred other pensions into nest and have a large amount. Despite the claims of nest ,their investment funds are poor value for money .

dunstonh

People go on about nest being free money from your employer,  even our martin lewis extolls its virtues but have a google about and see what others say about it. 

Anyone saying something different is wrong.

Free money from the employer cannot be beaten by alternatives.

The charge is lower than some pensions but they take a yearly percentage off the top. I can see in a few years time the state pension scheme being means tested so best to make sure you get your full 35 years paid up rather than other schemes. My own personal opinion which others will no doubt disagree with.

The charge is irrelevant as a small initial charge against free money still leaves you the bulk of the free money.   Whereas no initial charge against nothing is nothing.

bostonerimus

If you are working overseas you could well qualify to pay voluntary Class 2 NI which you should pay because it is so ridiculously inexpensive.

MX5huggy

Tranboy said:

The reviews on trust pilot if they can be believed for nest are somewhat critical about being able to withdraw and transfer your pension money.  Someone on there pointed out that with their  1.8% and 0.3 % charges on the % of your wages you pay in only 0.9% actually goes to your pension in addition to the employer 3% and government 1%. For those in their later years 50+ the charges are proportionately greater especially if you transferred other pensions into nest and have a large amount. Despite the claims of nest ,their investment funds are poor value for money .

You’ve just scatter gunned a load of percentages about with out the correct context. Specifically a lot more than 0.9% of your contributions go in the pension. 

sheslookinhot

Remember, it is not “free” money from an employer. It is factored in to your overall compensation and benefits.