Pension Help

Bimbly

Nest is perfectly fine, but I wouldn't be a fan of its 1.8% contribution charge.

I'd favour contributing as much as necessary to achieve maximum employer contributions into Nest and leave it there doing its thing. You probably want to choose an appropriate investment strategy there too. Then pay extra contributions into your own choice of SIPP where you have a better range of funds. Even then, I'd go for a basic multi-asset fund or a target retirement date fund, to keep it simple. Alternatively, go riskier in one Nest/SIPP and less risky in the other.

Pat38493

Exodi said:

QrizB said:

I think the general opinion on this board (although it isn't unanimous) is that Nest's 1.8% contribution charge is more than balanced out by its low ongoing charges?

OP is 35 and could potentially remain invested for 30+ years. Nest's 1.8% upfront charge is equivalent to an additional 0.06% pa over that period.

I disagree, and only in the interests of not being confrontational did I not comment on El_Torro's suggestion earlier it'll 'balance itself out'.

0.30% AMC is OK, but it's certainly nothing to write home over. There are plenty of platforms offering this or better, without the 1.8% contribution charge. Happy to run a simulation on Excel with another workplace provider (like The Peoples Pension, for example), but I think we both know it would be a waste of time and NEST would come out with lower returns.

QrizB said:

Trying to persuade your employer to pay their contribution to a different provider, when they only pay the minimum and have chosen a low-hassle auto-enrollment option like Nest, is unlikely to be successful.

I find this reply quite odd on a money saving forum. You're assuming the employer won't allow any other provider without even trying. I myself was on NEST, the default workplace provider, until a couple of years when I engaged the conversation with my employer. I am now significantly better off in a salary sacrifice arrangement with a different provider.

The OP is still young, they still have the opportunity to save 1.8% on their future contributions.

I suppose it's worth a try but I think he was saying it's unlikely that the employer will agree, not impossible.

Regarding Nest - the other pension doesn't just have to be better, it has to be enough better to cancel out the benefit of the employer contributions.  This is why a couple of posters suggested the option to keep paying in the minimum required to get the employer portion but maybe use a difference provider for additional requirements.  This would be my thought - my thinking is, if a provider needs to structure their charges to make it cost prohibitive to transfer out, they are probably not going to provide the best customer service as they think they've got you locked in.

For sure, with their charging structure you have to leave the money in there for a long time for the charges to make sense, if at all.

Exodi

Pat38493 said:

Exodi said:

QrizB said:

I think the general opinion on this board (although it isn't unanimous) is that Nest's 1.8% contribution charge is more than balanced out by its low ongoing charges?

OP is 35 and could potentially remain invested for 30+ years. Nest's 1.8% upfront charge is equivalent to an additional 0.06% pa over that period.

I disagree, and only in the interests of not being confrontational did I not comment on El_Torro's suggestion earlier it'll 'balance itself out'.

0.30% AMC is OK, but it's certainly nothing to write home over. There are plenty of platforms offering this or better, without the 1.8% contribution charge. Happy to run a simulation on Excel with another workplace provider (like The Peoples Pension, for example), but I think we both know it would be a waste of time and NEST would come out with lower returns.

QrizB said:

Trying to persuade your employer to pay their contribution to a different provider, when they only pay the minimum and have chosen a low-hassle auto-enrollment option like Nest, is unlikely to be successful.

I find this reply quite odd on a money saving forum. You're assuming the employer won't allow any other provider without even trying. I myself was on NEST, the default workplace provider, until a couple of years when I engaged the conversation with my employer. I am now significantly better off in a salary sacrifice arrangement with a different provider.

The OP is still young, they still have the opportunity to save 1.8% on their future contributions.

I suppose it's worth a try but I think he was saying it's unlikely that the employer will agree, not impossible.

Regarding Nest - the other pension doesn't just have to be better, it has to be enough better to cancel out the benefit of the employer contributions.  This is why a couple of posters suggested the option to keep paying in the minimum required to get the employer portion but maybe use a difference provider for additional requirements.  This would be my thought - my thinking is, if a provider needs to structure their charges to make it cost prohibitive to transfer out, they are probably not going to provide the best customer service as they think they've got you locked in.

For sure, with their charging structure you have to leave the money in there for a long time for the charges to make sense, if at all.

 I think you've misunderstood me - I didn't suggest telling the employer not to pay into a pension?

Obviously the best case would be the employer agreeing to pay into a different provider. Obviously if they were not willing to pay into any other provider then Nest, then as you say it would clearly be unlikely for a new provider without employer contributions to be better than Nest with employer contributions.

Personally, I think the contribution charge is specifically designed to take advantage of the fact that people don't pay attention to their pension till their later years.

hyubh

Exodi said:

I find this reply quite odd on a money saving forum. You're assuming the employer won't allow any other provider without even trying. I myself was on NEST, the default workplace provider, until a couple of years when I engaged the conversation with my employer. I am now significantly better off in a salary sacrifice arrangement with a different provider.

Nice. Whole company, or just you...?

Exodi

hyubh said:

Exodi said:

I find this reply quite odd on a money saving forum. You're assuming the employer won't allow any other provider without even trying. I myself was on NEST, the default workplace provider, until a couple of years when I engaged the conversation with my employer. I am now significantly better off in a salary sacrifice arrangement with a different provider.

Nice. Whole company, or just you...?

Not the whole company nor just me.

I wasn't the first to ask to change provider, but after they said it wasn't an issue to me, I did start a mini revolution with several people also changing providers shortly after.

I was quite lucky as I had noticed it early in my pension-investing life and my employer didn't seem too bothered by it on condition our payroll department didn't have an issue with it. The situation would have been drastically different if I was nearing retirement and the significant cost of contribution charges had already been sunk.

The OP is also young, now would be the best time to look into it.