Please help re transferring pensions into NEST. Is it worth it?

jamesd

Good or bad, NEST isn't so bad that you should opt out. The employer contributions that you'd lose are too valuable for that.

Just keep existing pension money away from NEST and for the new money turn off lifestyling and pick the Sharia fund. That's adequate for a few years and you can periodically transfer out. They won't let you do that while paying in so the sequence is opt out, transfer, opt back in.

Notepad_Phil

ET22 said:

...
I just looked and NEST charges are 1.8% unlike other pensions such as Hargreaves and Landsdowne is 0.5 or something like that, so i get that bit now, thats helpful to know, thankyou 
...

I'm not with Nest so cannot give any personal view on their suitability for you, but from reading of previous posts on MSE I believe the 1.8% charge is for people paying in regular monthly contributions, not for people who are transferring in from other platforms. I.e. for someone whose only money came in from a pension transfer, then my understanding is that your only charge would be the annual 0.3% charge.

jamesd

ET22 said:

I just looked and NEST charges are 1.8% unlike other pensions such as Hargreaves and Landsdowne is 0.5 or something like that     

Understanding charges is a bit fiddly at first so here's how it works.

Pension firms can take a cut of the money as it's paid in. Almost no pensions do this today. HL doesn't. NEST takes 1.8%.

Then there are ongoing charges which work in one of these ways:

A. The insurance company approach, used by NEST. This bundles the investment fund and pension company charge into a combined figure, 0.3% of the fund taken daily so that over the year it's 0.3% of the average balance for the year.

B. The independent investments approach. The pension firm makes its own charge, 0.45% a year at HL, plus the fund charge, perhaps 0.18% or 0.20% for a global equity tracker at HL. Thus a combined 0.63% at HL. Or more or less depending on which funds you choose. The pension firm charge can be a fixed Pound amount instead of a percentage, better for those with bigger pots.

C. Some insurance companies use a blended approach with a fixed all in percentage for maybe 100 funds and a surcharge for optional funds.

HL is OK for smaller starting amounts but the 0.45% gradually makes it less competitive as your pot size grows. Eventually some other firm with lower or fixed charges becomes better.

ET22

Hi , I’m a standard rate tax payer. 

So I’ll stay with the workplace pension to get the employer contributions and turn off lifestyle and keep Sharia. How do I opt in and opt out periodically? 

Thankyou x 

ET22

So am I right in thinking then NEST charge 1.8 percent and have no global rate tracker (I don't know what it is but seems very important) and others charge less than 0.2 per cent for it? What are the government gaining by not maximising NEST potential?   

ET22

I think my above comment is actually a stupid question x

Albermarle

ET22 said:

So am I right in thinking then NEST charge 1.8 percent and have no global rate tracker (I don't know what it is but seems very important) and others charge less than 0.2 per cent for it? What are the government gaining by not maximising NEST potential?   

As already explained in detail by @jamesd. Nest have an initial charge of 1.8% on contributions, which is poor, but only charge 0.3% all in as an ongoing charge, which is pretty low.
Others have no initial charge, but will charge around 0.4 to 0.7% for a simple global tracker.

ET22

Thankyou x 

jamesd

You tell your employer about opting out and in. They may have a preferred time when they want to do it and it's fine for you to work with that.

The government needed a place that would accept even single employee employers. NEST delivers that because it's required to accept everyone.

NEST gets to choose what it offers, no particular government gain. Most in it's target market won't know any better and there is thought behind what they do, just thought that's wrong for people posting here.

For example, NEST starts out with low growth investments for a long time because people don't like to see drops and low growth also has smaller drops, if one happens. But here we can just explain that it works like a rollercoaster in reverse, upward trend but lots of dips along the way. NEST doesn't want to explain and/or just thinks it might not be believed. For their logic their choice to try not to let people be scared off looks right, but here the loss in investment growth potential looks worthless when we can just explain.

ET22

I'll let the employer deduct the money, add their contribution, get the tax relief and turn off the lifestyle "thing" in NEST. I will find a different provider to pay into for other money. Thankyou for taking the time to explain it all to me, just a few hours before 2024.x