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Nest pension

loulou41
loulou41 Posts: 2,871 Forumite
in Auto-enrolment
Son who works for an agency has been enrolled with Nest. There is not much in the pension pot. I want to help and am wondering whether it will be to his advantage for me to top up his nest pension with a lump sum when I can afford it or is it better to save this money in an isa. Thanks

Comments

  • JoeCrystal
    JoeCrystal Posts: 3,011 Forumite
    Name Dropper First Anniversary First Post
    edited 26 February 2019 at 4:26PM
    I believe that anyone can contribute to someone else’s NEST retirement pot. They’ll need to pay by debit card and tell them the NEST ID of the member. I don't know if they get tax relief on it though.

    https://www.nestpensions.org.uk/schemeweb/NestWeb/faces/secure/common/pages/permittedPartyLanding.xhtml
  • planteria
    planteria Posts: 5,321 Forumite
    First Anniversary Combo Breaker First Post
    i think first of all you need to understand Pensions and ISAs, and the differences between them. and secondly, if you want to invest for your son via a Pension, decide whether his existing Nest scheme is the right choice of Pension: Nest is considered to be a 'basic' option.
  • cloud_dog
    cloud_dog Posts: 6,043 Forumite
    Name Dropper First Post Photogenic First Anniversary
    edited 28 February 2019 at 11:38AM
    OP you may also want to consider if a LISA may be a better option? For a basic rate tax payer (who's salary isn't paid via salary sacrifice) they both benefit equally via the tax relief for pension and bonus for LISA (uplift of 25%).

    The LISA has the advantage of being able to be used to buy a property.

    EDIT....You would be better off moving this post to the main pension forum.
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  • Afraid_of_Kittens
    Afraid_of_Kittens Posts: 342 Forumite
    Combo Breaker First Anniversary First Post
    If he is going to remain in a NEST scheme then he might consider the following to potentially maximise his returns.

    When someone is enrolled their money is placed into a lower risk 'Foundation Phase' for about 5 years. This means their money earns less interest for 5 years.

    After 5 years their money is placed into one of the default date fund for 30 or so years - the so called 'Growth Phase'.

    Then 10 years before retirement date their money is placed into a low risk 'Consolidation Phase'.

    This basically means that potentially you could lose 15 years of extra compounded interest.

    If you son wants potentially more interest on his pension pot and potentially a higher return then e should switch his money out of the default fund to a higher risk potentially higher interest fund.

    The best performing so far have been the Sharia fund and the Higher Risk fund.

    https://www.nestpensions.org.uk/schemeweb/nest/aboutnest/investment-approach/other-fund-choices.html?logged=yes

    I have put my NEST money into the Higher Risk Fund - although I would have had more of a return in the Sharia fund.

    The High Risk fund is volatile and can drop and increase - although the overall direction is upwards.

    If he had put his money into a High Risk Fund on 2nd January 2019 the unit price was £2.0916. Yesterday the unit price was £2.3160 an increase of 10.72% in 3 months.
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