5 questions answered about NEST pensions

Did you know that your employer has to offer you a pension by law?

Under auto-enrolment, which is expected to finish rolling out in 2019, employers will have to enrol employees into a workplace pension who:

  • Are aged between 22 and State Pension age
  • Earn at least £10,000
  • Work in the UK

Of course, this would only be successful if every employer had access to a suitable scheme – and that’s why the government funded the creation of the NEST workplace pension.

The question is, if you get the opportunity to join, is this a NEST you should settle into or flock away from?

Let’s answer some of the questions you may have:

1 PensionIs NEST different to other pensions?

 Yes and no.

Basically, it is like any other money purchase scheme.  This simply means that in terms of a workplace pension, you  and your employer contribute towards your retirement savings and from the age of 55 you can access the money that’s built up over time.

When NEST initially started, the annual allowance for contributions was only £4900. However, in April 2017 regulations were updated and now, as with other pensions, the total amount you can contribute to all your schemes is £40,000 per tax year before a tax charge applies. The tax relief you are able to claim is dependent upon your earnings. As always, tax treatment depends on your individual circumstances and could be subject to change.

Perhaps, the biggest difference between a NEST pension and other pensions is with the fees. Most modern pensions just have an annual fee – the NEST pension has two fees. The annual fee is currently set at 0.3% which is comparatively low, but members would also have to pay a fee of 1.8% on all new contributions. It is believed this fee may have been implemented to cover the cost of introducing it.

2 PensionIf I join a NEST pension can I change my mind later?

Yes, you can opt out of the NEST pension when you like. As with any money purchase scheme, you can’t access your savings until you are 55, but you can transfer your money to another pension scheme at any time after you have finished contributing.

3 PensionIf I don’t join now, can I do so later?

You can request to re-join any time you like. Auto-enrolment occurs in 3 yearly cycles so your employer would enrol you into a workplace pension during your employment and you have the option to opt out at any time.

4 PensionCan I open a NEST pension myself?

No, as it’s a workplace scheme, only employers and the self-employed can open one.

5 PensionIs it better than other pensions?

 As with all workplace pensions, NEST offers the highly valuable benefit of extra contributions (free money!) from your employer  - which shouldn’t be taken lightly. But like everything, from the house you live in to the mobile phone in your pocket, the right pension for you depends on your wants and needs and your circumstances.

Your circumstances include things like:

  • How close you are to retirement
  • How much is contributed to your pension each year
  • What it’s costing you
  • If you have other pensions and what they offer
  • Your future goals

How does NEST measure up? There’s more to this scheme than is included in this overview, and you can find these answers and more in our detailed FAQ page.

Get more answers about NEST pensions in our quick FAQ page:

  • Does it offer guarantees?
  • Is the government still involved?
  • Is a NEST pension right for you?
     

Click here for instant access

 

Are you confused about your pension options and still don’t know what to do?

Would you like a tailored recommendation for what’s most appropriate for you, both now and in the future? From people who have already helped thousands of others make the right decision with their pension and look after more than £1/2 billion of their savings for them?

That’s exactly what we offer. And the best part is, this review and your personal recommendation won’t cost you a penny. We’ll only charge a fee if you ask us to act on our advice.


Claim your free guide to personal pensions

Pension Information GuideA NEST pension is just one of many different types of pension – the key is finding a great performing scheme that meets your unique needs and goals. To understand a little more about the world of pensions and find out how we can help you find the best possible options for your retirement - request our guide. Get your free guide to personal pensions now

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Important information

Tax treatment depends on your individual circumstances and may be subject to change in the future.

The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section: https://www.portafina.co.uk/whats-new

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Comments

I think these are five question that everyone asks every time people think to get nest pensions and when I was searching for my grandfather the same I was confused and I searched a lot and found recommendasupplier. They compare nest pensions so that you can get best results.

The government have introduced this scheme but the workplace pension companies are charging a setup cost per employee. I paid £350.00. What for? I cannot believe it costs that amount to setup 1 persons pension

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