- May 6, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Nest Pension Dilemma: Exploring Options for Investing
I have a nest pension from a previous job that is currently performing exceptionally well in the sharia fund it is invested in. Despite some negative opinions about nest pensions, I have seen positive results with this particular fund.
My new job offers a similar fund through smart pension, but it is not performing as impressively as the nest pension. Additionally, my new job does not contribute to the nest pension, leaving me with a decision to make regarding my retirement savings.
In this situation, I am considering the possibility of personally contributing to my nest pension. However, I am unsure of the potential downsides of this decision. Will there be any adverse effects on my overall retirement savings strategy if I choose to do so?
Furthermore, I currently hold a LISA and a stocks and shares ISA with Freetrade. I am concerned about whether I am spreading my money across too many financial products, potentially impacting the efficiency of my investments.
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It looks like you can pay in personally to Nest. See https://www.nestpensions.org.uk/schemeweb/memberhelpcentre/contributions/make-additional-contributions.html
If your new employer pays into your pension using salary sacrifice, that is a slightly cheaper way for you to pay into your pension. It reduces your salary so you save on tax and NI. If your employer uses salary sacrifice, it would be better for you to pay extra into their pension.
> Am I spreading my money across too many products?
Each product has a different purpose.
* Your pension can only be used for retirement.
* Your LISA can be used for buying a property or for retirement.
* Your ISA can be used for anything.
It is sensible to spread your money across different products for different reasons. For example, having a million quid in a pension is useless if you want to buy a house today.
You can pay into as many as you like, as you long as you keep within the limits for the total you pay in (£60K a year or your earned income, whichever is lower).
The downside is that you’re probably paying more in fees than you need to. I use Vanguard for my SIPP and ISA (and GIA) and the account fees across those is capped (at about £350/year).
Thanks to the link from u/edent, you’ll see nest charge an eye watering 1.8% for any top ups. Best avoided
is the sharia fund available elsewhere?
Are you a higher rate tax payer?
Are you paid under a Salary Sacrifice arrangement?
I have a NEST account and pay in ad hoc amounts. At the bottom of the dashboard/home page after logging in, there is a ‘make additional contibutions to NEST’ column. You can pay in by debit card or set up a regular direct debit.
Someone on here suggested the downside is the money you are using, from your income, has already been taxed or subject to tax, in effect, as it has come from salary? But I still do it.
The Nest and the Smart Pension sharia funds share an underlying fund: the HSBC Islamic Global Equity Index.
So the difference in performance between Smart and Nest should be very small, and down to fees.
But Nest also charges 1.8% on contributions, which won’t show in your fund performance. So you haven’t quite made as much as you think because you start from a slightly lower position, i.e. put £100 in Smart and £100 goes into the fund, compared to £98.20 with Nest.
Based on that 1.8% fee it’s unlikely worth adding more than necessary to Nest.
If it was me, I’d maximise my employer/salary sacrifice contributions into Smart. Any extra that I wanted to add I would lean towards doing so via a SIPP or LISA into the underlying HSBC fund. Very slightly more admin than just doing it via extra payments to the workplace pension, but would mean slightly lower fees.
Hi /u/redonculous, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/lisa/
* https://ukpersonal.finance/pensions/
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> the sharia fund it’s in is performing super well.
Why do you believe it will continue to do so?