What is a NEST pension?
20 Dec 2023
The Basics of NEST
NEST (National Employment Savings Trust) is a pension scheme established by the government to help employers provide pension facilities without having to set up their own schemes. This public, defined contribution pension scheme is widely used by a variety of employers, including those who are self-employed and wish to contribute towards their retirement savings.
How Does It Work?
Once you're part of a NEST pension scheme, both you and your employer make contributions towards your pension pot. These contributions receive tax relief, boosting the amount in your retirement fund. The scheme manages these savings and invests them, aiming to grow your fund over the years until you retire.
Features and Fees
Being a government-backed scheme, NEST offers certain securities but comes with its own set of fees. You'll pay a 1.8% fee on contributions and an annual management charge of 0.3% on your total pension pot. These contributions are pooled with other members’ savings and invested in a variety of assets depending on the selected fund.
Investment Choices
With NEST, you can choose from several funds, including ethical and Sharia law compliant options. For those closer to retirement, there are lower-risk options. Most people opt for Retirement Date Funds, which adjust your investments as your retirement approaches to optimize returns and manage risk.
Accessibility and Transfer Options
Accessibility can sometimes be an issue. If you need details about your policy or funds, you often have to contact NEST directly. However, it’s straightforward to transfer from NEST to another pension provider, like Penny. This can be beneficial if you prefer a different investment strategy or want to consolidate your pensions for easier management.
The Takeaway
While NEST does a good job as a foundational pension plan, remember that you have the freedom to switch to a pension management solution that best fits your personal financial goals. At Penny, we streamline the process of transferring and managing your pension, making it as simple as using an app on your phone. So if you're looking to make managing your retirement savings easier, exploring options beyond NEST might be worth considering.
