NEST Pensions

NotTightJustCareful

My partner works for charity and they use NEST as their pension provider. She is 57 and has possibly 10 more years to retirement. They currently don't allow pension sacrifice but they will be in the near future. He hourly wage isn't great but is it above the living wage so i have advised her to max out her pension by paying into it so as to pay herself the living wage hourly rate before tax. She is in the default fund which I understand is an life styling one so will start dialing down the risk by allocating a greater % to bonds. I think this a little too cautious as she will be receiving her teachers pension at 60 as she worked part-time full many years and a full state pension at 67.  She will have her basic pension needs meet by these at 67. She has spare cash to invest also. How can she feed this into the NEST pension? Would be better to open a SIPP and will whom , I don't like vanguard target retirement funds heavy allocation to UK shares. Any advice would be welcome.

gravel_2

Nest charges 1.8% on contributions so you could find her best bet is to only pay the minimum to get the employer's maximum match and then put everything else into a SIPP. If you are in England/Wales and she is on basic rate then this should be easy tax-wise, a little more work if in Scotland and/or higher rate. Salary sacrifice could change the picture a little but if low income then NICs will be minimal anyway. Note also that if she is close to minimum wage the move to salary sacrifice may prevent her from making serious additional contributions as it could bring her salary below the minimum wage threshold.

Also, NEST is quite limited on fund options. Higher Risk is more equity focused but still a mixed asset fund with bonds and property. The most adventurous fund they have is the Sharia one, which is basically 100% equities, avoiding of course any haram companies which I assume means finance, weapons and alcoholic beverages etc. 

BlackKnightMonty

You can simply make an ad-hoc payment into NEST and recoupe any overpaid taxes in a self assessment.

https://www.nestpensions.org.uk/schemeweb/memberhelpcentre/contributions/make-additional-contributions.html

this forum isn't keen on NEST. And especially not keen on the (best performing) Sharia fund. Every time NEST gets mentioned it generates negative remarks.

my two pence; NEST is a big robust scheme with essentially a state backing. Yes the options are limited. But that keeps it simple. There is no charge to transfer in/out unlike lots of other pensions.

dunstonh

They currently don't allow pension sacrifice but will be in the near future.

Nest support salary sacrifice. Its the employer that doesn't.     It may be that the many of the employees of the charity are low earners and salary sacrifice wouldn't benefit them.

this forum isn't keen on NEST. And especially not keen on the (best performing) Sharia fund. Every time NEST gets mentioned it generates negative remarks.

Its the best performing since it was launched but it has only been available in a period when tech was top.    Too many people are being encouraged to invest in it by certain posters without realising it is very high risk.

my two pence; NEST is a big robust scheme with essentially a state backing. 

It borrowed from the state (which is what many don't like as the commercial market has to compete against that) but on the other side, it could be forced to follow Government investing requirements whereas commercial schemes will  not.

There is no charge to transfer in/out unlike lots of other pensions.

No.    Since 2001, there have been no exit charges on pensions apart from St James Place and plans set up before that time.

BlackKnightMonty

Like I said - some on here don’t like NEST!

Albermarle

Nest charges 1.8% on contributions so you could find her best bet is to only pay the minimum to get the employer's maximum match and then put everything else into a SIPP.

On the other hand their ongoing charge is only 0.3% all in, so eventually over a long period the hefty initial charge is largely diluted away. Your average SIPP charge will be more than 0.3%, although it can be less if you work at it.

my two pence; NEST is a big robust scheme with essentially a state backing. Yes the options are limited. But that keeps it simple. There is no charge to transfer in/out unlike lots of other pensions.

The comment in bold is simply not true. Very few pensions have transfer charges anymore.

In fact some providers offer generous cashbacks from time to time, to tempt people to transfer in to them.

I have transferred two pensions and both times the provider gave me £500, and recently these cashback offers have been getting bigger ( up to £3000 for a big pot)  

gravel_2

Albermarle said:

Nest charges 1.8% on contributions so you could find her best bet is to only pay the minimum to get the employer's maximum match and then put everything else into a SIPP.

On the other hand their ongoing charge is only 0.3% all in, so eventually over a long period the hefty initial charge is largely diluted away. Your average SIPP charge will be more than 0.3%, although it can be less if you work at it.

my two pence; NEST is a big robust scheme with essentially a state backing. Yes the options are limited. But that keeps it simple. There is no charge to transfer in/out unlike lots of other pensions.

The comment in bold is simply not true. Very few pensions have transfer charges anymore.

In fact some providers offer generous cashbacks from time to time, to tempt people to transfer in to them.

I have transferred two pensions and both times the provider gave me £500, and recently these cashback offers have been getting bigger ( up to £3000 for a big pot)  

I could be wrong to view it this way but the person is 57, <10 more years of work, thinking about topping up into Nest with fee. I'd want more of my money working for me earlier in that particular process rather than paying Nest.

Albermarle

gravel_2 said:

Albermarle said:

Nest charges 1.8% on contributions so you could find her best bet is to only pay the minimum to get the employer's maximum match and then put everything else into a SIPP.

On the other hand their ongoing charge is only 0.3% all in, so eventually over a long period the hefty initial charge is largely diluted away. Your average SIPP charge will be more than 0.3%, although it can be less if you work at it.

my two pence; NEST is a big robust scheme with essentially a state backing. Yes the options are limited. But that keeps it simple. There is no charge to transfer in/out unlike lots of other pensions.

The comment in bold is simply not true. Very few pensions have transfer charges anymore.

In fact some providers offer generous cashbacks from time to time, to tempt people to transfer in to them.

I have transferred two pensions and both times the provider gave me £500, and recently these cashback offers have been getting bigger ( up to £3000 for a big pot)  

I could be wrong to view it this way but the person is 57, <10 more years of work, thinking about topping up into Nest with fee. I'd want more of my money working for me earlier in that particular process rather than paying Nest.

You are right, if we assume that the person involved is savvy enough to set up a different pension with low fees.
If they say go to HL and invest in one of their in house funds ( as many do) they will be significantly worse off.

NotTightJustCareful

I was considering setting up a pension with Vanguard Target Retirement Fund 2030 for my partner to put her extra cash she has which in surplus to NEST pension paid by salary sacrifice. The 1.8% charge on contributions for NEST is a bit strong for my liking. Does anyone have any low charge SIPP provider suggestions for her ? I agree HL are too expensive.