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Nest Pension - Good Value?

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triplea35
triplea35 Posts: 339 Forumite
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Is Nest good value in relation to costs. 1.8% deduction on all contributions and a .3% annual management charge. How does this compare with Low Cost DIY Sipps? Difficult because of the different costs structure.

The default fund is a retirement date fund, Is this similar to the Vanguard Target Retirement Date Funds.

I see the Nest has a Foundation Phase of approx 5 years, good or bad?

My son has a Nest workplace Retirement Fund 2060 in the Foundation Phase. I have money set aside to make some large additional contributions over the next few years, just cant decide as to putting it in the Nest and also transfer a Sipp with H&L so all in one fund.

My son has no thoughts on the matter!
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  • dunstonh
    dunstonh Posts: 116,371 Forumite
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    How does this compare with Low Cost DIY Sipps?

    In general, SIPPs are more expensive. Some exceptions apply. Advised pensions are coming in around 0.2x%- 0.3% nowadays. Anything under 0.5% p.a. is generally regarded as good for simple options.
    The default fund is a retirement date fund, Is this similar to the Vanguard Target Retirement Date Funds.

    Similar in process but different in execution. The Vanguard TR funds are not a great option.
    I see the Nest has a Foundation Phase of approx 5 years, good or bad?

    Good if it is suitable. Bad if it isnt.

    NEST is an option aimed at smaller employers who dont have the volume to get in place better schemes from the big providers. it does that very well. Even if I disagree with the drain on the taxpayer (in the form of loans which will probably get written off at some point) and a rather antiquated way of doing things.
    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.
  • triplea35
    triplea35 Posts: 339 Forumite
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    edited 9 October 2018 at 8:46AM
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    I have no issue at all with the .3% AMC for active managed but just the 1.8% contribution charge, particularly on the lump sum, seems a lot to bear.
    As I said my son already has a SIPP with HL, of around £30k. I see there is no contribution charge for transfers in to Nest
    I want to put a further £80k in for him, which will take around 3 tax years, based on his current salary, to get the benefits of tax relief.
    A simple solution may be to put all the money into his HL Sipp and then transfer over to Nest.
    I presume I could also transfer the HL Sipp after making this years contribution, and then open a new one each year to spread the contributions into the Nest pension. I appreciate HL has a £25 transfer charge for a cash SIPP but this relatively small change to the savings made on the contribution charge.
  • Afraid_of_Kittens
    Afraid_of_Kittens Posts: 342 Forumite
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    The way to avoid the 5 year foundation phase is to transfer the funds out of default date fund into one of the other non default funds such as the Sharia or High Risk. Historically these two funds have been the best performing.

    10 years before you retire, irrespective of the fund you are invested in your cash lump sum is shoved automatically into a 'consolidation phase' meaning you money is put into a lower growth
    low risk fund.

    To avoid this phase you need to extend your retirement date by 10 years so your son would need to change his retirement date tp 2070.

    90% of people have left their money in the automatic date fund. They could potentially lose 15 years of growth and compounded interest because of the 5 year foundation and 10 year consolidation phases.

    It is a risk and nobody has a crystal ball and knows how the funds perform. You will need to study how the funds have performed historically and if your son wants to take the risk and put his pot into another fund and extend his retirement date.

    Extending his retirement date still means he can take his cash out aged 55.
    I enjoy flower arranging, kittens, devil worship, the study of serial killers and their methods and road kill jigsaws.
  • tacpot12
    tacpot12 Posts: 7,968 Forumite
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    Great advice from Afraid of Kittens's.
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • Afraid_of_Kittens
    Afraid_of_Kittens Posts: 342 Forumite
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    Just been given this link on another thread https://www.trustnet.com/factsheets/p/klls/nest-sharia-pn

    Ideal to research the other NEST funds.
    I enjoy flower arranging, kittens, devil worship, the study of serial killers and their methods and road kill jigsaws.
  • Afraid_of_Kittens
    Afraid_of_Kittens Posts: 342 Forumite
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    Afraid_of_Kittens wrote: »
    The way to avoid the 5 year foundation phase is to transfer the funds out of default date fund into one of the other non default funds such as the Sharia or High Risk. Historically these two funds have been the best performing.

    10 years before you retire, irrespective of the fund you are invested in your cash lump sum is shoved automatically into a 'consolidation phase' meaning you money is put into a lower growth
    low risk fund.

    To avoid this phase you need to extend your retirement date by 10 years so your son would need to change his retirement date tp 2070.

    90% of people have left their money in the automatic date fund. They could potentially lose 15 years of growth and compounded interest because of the 5 year foundation and 10 year consolidation phases.

    It is a risk and nobody has a crystal ball and knows how the funds perform. You will need to study how the funds have performed historically and if your son wants to take the risk and put his pot into another fund and extend his retirement date.

    Extending his retirement date still means he can take his cash out aged 55.

    The online NEST page has now introduced a feature where you can keep your money in another fund until you retire thus avoiding extending your retirement date.
    I enjoy flower arranging, kittens, devil worship, the study of serial killers and their methods and road kill jigsaws.
  • triplea35
    triplea35 Posts: 339 Forumite
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    edited 8 April 2019 at 7:38AM
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    Afraid_of_Kittens wrote: »
    The online NEST page has now introduced a feature where you can keep your money in another fund until you retire thus avoiding extending your retirement date.

    Yes, thank you, we did find this recently when we switched funds - to the Higher Risk Fund - and we had the options to 'reduce risk as you approach retirement' or 'continue with higher risk until retirement'. We chose the later but suppose he has another 20 to 30 years to monitor and amend if he wishes.

    The Higher Risk has done well recently and is more inline with the level of risk I would be prepared to take over the long term of this investment.

    His 'pot' however is still less than 2k from his workplace contributions, but I have continued to load his SIPP with HL, which stands at around 58k. We do intend to try and transfer the HL SIPP into Nest at some point in the future.
  • Afraid_of_Kittens
    Afraid_of_Kittens Posts: 342 Forumite
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    The High Risk Fund unit price was £2.0916 Wednesday 2nd January 2019 and yesterday the value was £2,3269 Thursday 18th April 2019 - an increase of 11.23% in 3 and a half months. It was volotile last year dropping by 10% but it has recovered and gone back to the previous high figure from last year.
    I enjoy flower arranging, kittens, devil worship, the study of serial killers and their methods and road kill jigsaws.
  • stphnstevey
    stphnstevey Posts: 3,224 Forumite
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    Afraid_of_Kittens wrote: »
    Just been given this link on another thread https://www.trustnet.com/factsheets/p/klls/nest-sharia-pn

    Ideal to research the other NEST funds.

    Which thread? Just might have other interesting info
  • Afraid_of_Kittens
    Afraid_of_Kittens Posts: 342 Forumite
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    stphnstevey wrote: »
    Which thread? Just might have other interesting info

    https://forums.moneysavingexpert.com/showthread.php?t=5925800

    Transferred my money into the Sharia fund. Good growth so far this year.
    I enjoy flower arranging, kittens, devil worship, the study of serial killers and their methods and road kill jigsaws.
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