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:
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:
Is NEST different to other pensions?
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.
If I join a NEST pension can I change my mind later?
If I don’t join now, can I do so later?
Can I open a NEST pension myself?
Is it better than other pensions?
Your circumstances include things like: