Is a NEST pension worth it?

NEST stands for the National Employment Savings Trust and it was set up by the government over a decade ago now. NEST was introduced to make sure every employee had access to a qualifying workplace pension scheme (also referred to as QWPS). NEST also complies with the Auto-Enrolment legislation.

When NEST was designed and released it initial objective was to be the last resort for smaller employers who couldn’t find an alternative pension provider. But still to this date a large number of small and medium sized business’ still use it.

So, is a NEST pension the best choice for you and your employees? Here are some of the biggest drawbacks of the NEST pension:

NEST pension charges

When NEST was introduced it was initially set up to be a low-cost workplace pension scheme. But over a decade later and NEST pension charges are actually more expensive than some of it’s competitors.

If instead you used a Salary Exchange – also referred to as a Salary Sacrifice – you could save around £,1500 per annum for just 12 members, if you’re interested in learning more our pension advisers will be able to assist you [1].

[1] Each with average salary of £30,000 paying 3% with a 13.8% NI saving

Inheritance Tax

NEST pension schemes can be subject to inheritance tax unlike other pension providers.

NEST will pay the death benefits directly into a members estate. This could result in the amount diminishing by as much as 4% before it reaches the next of kin, the government have been heavily criticised for this but this policy has no plans to change.


Pension contributions are increasing each year and there is a greater need to ensure your pension provider will be able to carry on working for you and your employees.

As your employees increase their contributions they will want to know more about the workplace pension scheme your company has chosen. This will lead to more transparency and freedom regarding what funds their pension is invested in, employers may also want to get a larger return for their benefit spend once they are paying more than 2% and 3%. NEST won’t provide this support.

Can you transfer your NEST pension?

The average employee will change their job seven times before they retire. However, originally the government prevented NEST pension transfers in and out of the scheme. This makes it difficult for employees to consolidate their pension pots.

However, the government have since reversed that decision and as of April 2018, NEST pension holders were now allowed to transfer their pensions.

If you currently have a NEST pension and would like to discuss your options with a professional pension adviser then contact us now for a fee free consultation chat.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.