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    • Dragon Lily
    • By Dragon Lily 17th May 18, 11:03 PM
    • 247Posts
    • 2,465Thanks
    Dragon Lily
    NEST pension at 54 yrs old
    • #1
    • 17th May 18, 11:03 PM
    NEST pension at 54 yrs old 17th May 18 at 11:03 PM
    Hi
    I've recently started a new part-time job and my employer will be enrolling me in the NEST pension (3% contributions from me and my employer). I'm 54 and my plan is to retire in 6 yrs time at 60 when my LGPS pension (3,500 pa with 9,000 lump sum) kicks in and my OH retires at 67 yrs.

    I know the school of thought is to go with the employer pension because of the extra contribution and normally I would agree with this but I was wondering what was the best thing to do. I also have 2 other pensions (both are DC pensions - 6,000 and 85,000 pots). I've just started paying into the higher DC pension since January and am looking to transfer the smaller one into that pot at some point.

    Does anyone think it would be better to pay into the higher DC pension or just pay into the NEST pension because of the employer contribution even though I will be retiring in 6 yrs time. Will that be enough time to get anything much from a new pension?

    DL
    Star from Sue-UU

    SPC10= 209
    SPC11 #105
    3-6 EF #66 Target 3000 (1135) 38%
Page 1
    • Brynsam
    • By Brynsam 17th May 18, 11:34 PM
    • 948 Posts
    • 619 Thanks
    Brynsam
    • #2
    • 17th May 18, 11:34 PM
    • #2
    • 17th May 18, 11:34 PM
    Why would you give up 'free' money (i.e. the employer's contribution) unless the charges on your NEST pension are vastly higher than your existing DC pensions - so much higher that you'd be worse off (wildly unlikely!)?

    Have you checked if one of your two existing DC pensions has lower charges than the other? If so, contribute to that (as well as NEST) if you wish to beef up your pension savings in the next 6 years. Don't automatically assume that the 85K pension has lower charges than the smaller one - it is worth making sure.

    You have the option of putting all the DC pots together at the time you decide to draw your benefits.
    • BLB53
    • By BLB53 17th May 18, 11:40 PM
    • 1,266 Posts
    • 1,049 Thanks
    BLB53
    • #3
    • 17th May 18, 11:40 PM
    • #3
    • 17th May 18, 11:40 PM
    Definitely go with your current employer Nest pension. Rises to 8% from next April which includes 3% from your employer so why would you turn down this free contribution plus a further 1% from the taxman.
    If you choose index funds you can never outperform the market.
    If you choose managed funds there's a high probability you will underperform index funds.
    • Dragon Lily
    • By Dragon Lily 18th May 18, 5:32 PM
    • 247 Posts
    • 2,465 Thanks
    Dragon Lily
    • #4
    • 18th May 18, 5:32 PM
    • #4
    • 18th May 18, 5:32 PM
    Thanks for replying guys !!!55357;!!!56832;

    I was unsure what to do for the best but was thinking maybe I should pay into the NEST pension for the free money as well as the larger DC pension. So will do both! The DC pension is with RL. I transferred from an old stakeholder pension with Aviva over a year ago to get lower management charges and more flexiblily for when I retire and it's been doing really well so far.

    DL
    Star from Sue-UU

    SPC10= 209
    SPC11 #105
    3-6 EF #66 Target 3000 (1135) 38%
    • kidmugsy
    • By kidmugsy 18th May 18, 10:26 PM
    • 10,555 Posts
    • 7,230 Thanks
    kidmugsy
    • #5
    • 18th May 18, 10:26 PM
    • #5
    • 18th May 18, 10:26 PM
    I also have 2 other pensions (both are DC pensions - 6,000 and 85,000 pots). I've just started paying into the higher DC pension since January and am looking to transfer the smaller one into that pot at some point.
    Originally posted by Dragon Lily
    Hold back on that transfer. There's a way of withdrawing the 6k pension - because it's so small - without its reducing the amount you're allowed to contribute to pensions every year. Once you've got it - presumably 25% tax-free and 75% taxed at 20% - you will be free to contribute it to the other pension and pick up tax relief on the way in, as long as your earnings are large enough to cover all your contributions.

    This link suggests you can pull the stunt three times.
    https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/the-right-choice-for-me/taking-a-small-pension-as-a-cash-lump-sum


    The Pru link says "Please note: small pots don!!!8217;t trigger the money purchase annual allowance (MPAA). We!!!8217;ve written more about this in our Money Purchase Annual Allowance article."
    https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/small-pots-defined-benefit-trivial-commutations/

    Perhaps you could consider splitting the bigger DC pension to give you another "small pot" in a couple of years time. Perhaps you can think of a variant that suits your particular situation better. Anyway, worth pondering.

    UPDATE: before you can take that "small pot" you'll have to wait until you are 55. Not long to go, eh?
    Last edited by kidmugsy; 18-05-2018 at 10:33 PM.
    Free the dunston one next time too.
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