NEST Pensions Higher Risk Fund

Unicorn_cottage
Unicorn_cottage Posts: 879 Forumite
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edited 20 January 2018 at 6:53PM in Pensions, annuities & retirement planning
Hi all

Like many people I am trying to understand pensions. It was my new years resolution.

I currently have a very small pot of money is the default Nest pension pot should I consider the higher risk one for better gains?

I am 43 with very little pension so far which I am working through to understand.

Thanks all.
"Everything comes to him who hustles while he waits" Thomas Edison
Following the Martin mantra "Earn more, have less debt, improve credit worthiness" :money:
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Comments

  • Alexland
    Alexland Posts: 9,653 Forumite
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    edited 20 January 2018 at 9:17PM
    Higher risk doesn't guarantee better gains - it opens up the possibility of higher drops too.

    What is your volatility tollerence - would you be ok if your investment significantly dropped in value, say 50%, before a slow recovery over many years back to the original value? Would you be ok to sit tight or would you sell, crystallise the loss and move into a less volatile fund?

    Alex
  • LHW99
    LHW99 Posts: 4,211 Forumite
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    Can you add some more to the NEST pension and get a bit more from your employer (although contributions will go up shortly anyway)?
    You could transfer a small amount from your current pot into a higher risk fund, but keep contributing to the default one, and see how both react over the next couple years. Or leave the current pot as is, and split new contributions between it and the higher risk one (I presume, as I'm not that familiar with NEST)
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Unicorn_cottage wrote: »

    I currently have a very small pot of money is the default Nest pension pot should I consider the higher risk one for better gains?

    Don't put money at risk that you cannot aford to lose. Compounding is your friend. Over time your money will grow. The longer you leave it invested the better.
  • Unicorn_cottage
    Unicorn_cottage Posts: 879 Forumite
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    Thrugelmir - I looked at the different pensions that NEST offer and the higher risk one seemed to be performing much better so thought it would be worth a whirl! I also heard that nearly everyone enrolled in NEST is in the default scheme.

    LHW99 I don't think you can split your investments in NEST?

    My employer offers a non-contributory pension scheme so am not sure if I can make further contributions? I will ask the question. People talk about maxing out your pension contributions but I am not sure what this means as in theory I assume you could put your whole salary towards additional contributions?
    "Everything comes to him who hustles while he waits" Thomas Edison
    Following the Martin mantra "Earn more, have less debt, improve credit worthiness" :money:
  • crv1963
    crv1963 Posts: 1,372 Forumite
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    Unicorn_cottage wrote: »


    My employer offers a non-contributory pension scheme so am not sure if I can make further contributions? I will ask the question. People talk about maxing out your pension contributions but I am not sure what this means as in theory I assume you could put your whole salary towards additional contributions?


    Find out what percentage of your salary they pay into the pension deduct that from your earnings the remaining sum of money is what you can save. Then if you are not contributing any of your salary you can start a pension pot of your own, the limit as I understand is 40k pa total contributions to a pension(s) saving. There are various ways of doing this- Personal Pension, AVC, SIPP, possibly additional contributions to employers scheme if allowed.


    Theoretically yes you can put your whole salary up to 40k pa into a pension. As long as Employee and Employer contributions in total don't exceed 40k limit.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
  • Unicorn_cottage
    Unicorn_cottage Posts: 879 Forumite
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    Hi crv1963

    Thank you for your reply. My employer currently contributes 5% and this is due to go up to 10% in August. I have some debts to pay off but once I have done this I would feel ok to start putting additional chunks of my salary into a pension. I am a basic tax rate payer.
    "Everything comes to him who hustles while he waits" Thomas Edison
    Following the Martin mantra "Earn more, have less debt, improve credit worthiness" :money:
  • crv1963
    crv1963 Posts: 1,372 Forumite
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    Unicorn_cottage wrote: »
    Hi crv1963

    Thank you for your reply. My employer currently contributes 5% and this is due to go up to 10% in August. I have some debts to pay off but once I have done this I would feel ok to start putting additional chunks of my salary into a pension. I am a basic tax rate payer.



    Then until August you could in theory pay 95% of earnings and from August 90% of earnings into a pension. If I were you I'd read through lots of the threads here, follow some of the links and ask lots of questions to clarify my understanding. That's what I did/ am doing.


    Decide what strategy is comfortable for you, make a plan, maybe test it in a thread- someone always has constructive criticism or alternative ideas.


    IMHO there is nothing like a silly question, those that don't question are silly!


    Good luck.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
  • dunstonh
    dunstonh Posts: 116,359 Forumite
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    I looked at the different pensions that NEST offer and the higher risk one seemed to be performing much better so thought it would be worth a whirl!

    Have you only compared those figures in growth periods or have you included the stockmarket crashes that will occur? For example, if the data is less than 10 years ago, then you wont have the credit crunch in there where the higher risk ones would have fallen by half their value.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Unicorn_cottage
    Unicorn_cottage Posts: 879 Forumite
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    Dunstonh I just looked at the brochure NEST provided. The Sharia fund seems to be doing best of all!
    "Everything comes to him who hustles while he waits" Thomas Edison
    Following the Martin mantra "Earn more, have less debt, improve credit worthiness" :money:
  • Unicorn_cottage
    Unicorn_cottage Posts: 879 Forumite
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    Thank you CRV - it is such a mindfield but I am going through the pensions I have at the mo (about 5) and figuring out what they will be worth etc.
    "Everything comes to him who hustles while he waits" Thomas Edison
    Following the Martin mantra "Earn more, have less debt, improve credit worthiness" :money:
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