Nest – the Government’s pension that can’t pay you a pension.

Nest’s normal retirement age is your state retirement age. Seven years before my Nest retirement, I got an email. This email has triggered me to explore my pension options with Nest – and to this blog

I decided to make some changes to my Nest account, what follows is my journey towards turning my Nest pot into a pension. I decided to view my Nest retirement options.

Because I have more than £10,000 in my Nest pot, I qualify for an extra Nest retirement option . But before I get to see what it is, I need to pass through a screen with a “strong nudge” to Pension wise, a retirement check and a click to changing my retirement date.

the link to my retirement check didn’t work from my mail but I did follow it later in my journey , I moved on to changing my retirement date.

Warning

Changing your retirement date is not just you telling Nest you fancy waiting longer or shorter to get at your money. You trigger a fund switch as you move from one target date fund to another.

So this is a bit of functionality to be treated with a lot more respect than I gave it! A bit of feedback to Nest – while you are taking every care, I suspect not all your members are quite as careful!


On to the hub!

Having inadvertently triggered a fund switch by playing with my retirement date, I clicked to proceed to the Retirement Hub itself and was greeted by an array of options

These include links to other Government sites such as DWP’s pension tracing service, the Money Helper retirement income modeler and Nest’s own guidance and advice pages

While I was able to see the value of my pot, I had very little idea what had happened to my money since I’d sent it to Nest. I did get to a page which told me this

But that was about it. I could see that I was in the Retirement Date Fund but just what I was moving from and to was not clear. I was moving from the Nest Retirement Date Fund to the Nest Retirement Date Fund – so what?

So as I delved deeper into my options , I found it hard to work out what was happening to my money. So I decided to look at the “help” options.

Nest’s micor-blogs on Twitter are great and make me want to stay invested with people who are doing good with my money. Nest is getting good at social media and the more I read there blogs, the more I want to find myself in the right Nest fund for me.

So I  found my way to the help center and web chat open on a Sunday morning. My chat confirmed that I had inadvertently triggered a fund switch and that I’d have to wait for that to go through before switching again.

But my helper provided me with the link to the fund switching facility (which I couldn’t find myself).


So where do I go for my pension?

While I wait to sort out my retirement date and funds I use going forward, I decided to do some exploring on what my options were for getting my pension.

I have been nudged to discover that being 60 and having more than £10,000 in my account, I am eligible to join the Nest Guided Retirement Fund. On closer inspection this fund would split my  money into a cash fund for emergency withdrawals, a growth fund , for future withdrawals and an annuity protection fund for the annuity that I’ll be buying at 85.

What I found harder to get , was an idea of what a “sustainable withdrawal” would mean for me. There is a detailed process for taking the money  This is quite a palaver and not quite what you’d expect when making a withdrawal from a bank or building society account.

  • Once you have submitted your request, to protect your Nest pot we send your details over a secure link to Experian to help check your identity. This won’t affect your credit rating or any future credit searches.

  • You should receive the payment within 5 – 10 working days once we’ve received the required information or if we don’t need any further details.

There doesn’t appear to be any guidance about what an “acceptable withdrawal rate” is, but it looks like emptying your “nest wallet” each month is the suggested way of getting paid from this fund. You can raid the Nest safe when you need more than you have in your wallet. Accessing the vault triggers closure of the account.

The process of taking money from the Nest wallet  or  from the vault is governed by clearly defined rules.

  • The minimum amount you can withdraw from your Nest Wallet is £20, or the full amount if lower. You can make one withdrawal a month.

  • You can make withdrawals from your Nest Safe at any time if funds are available.

  • If you want to take money from your Nest Vault, you’ll either need to come out of the Nest Guided Retirement Fund and choose a different retirement option, or you can take all of your pot as cash.


What other options do I have?

I am looking to set up a regular withdrawal from my Nest Account – not quite a pension , but a supplement to my income at some point in the future. Surprisingly this facility is not available other than by manual requests – as confirmed on Nest web-chat

This statement comes from “Taking your money out of Nest” which you can download from this link

Take regular withdrawals
through the Nest Guided
Retirement Fund

The only guidance on with drawls is the amount available in the wallet (determined by investment performance elsewhere, the amount available will therefore go up and down from month to month. People who worry about the predictability of CDC income, should think about the alternative, this is Nest’s alternative

If I don’t want to use the Guided Retirement Service,  Mayur tells me I can manage my own drawdown w, but again I can’t set these to be paid automatically and withdrawals are restricted to one a month.

The alternative is to cash out in one go, buy an annuity or transfer to a pension plan that can offer a wider range of options. These are not Nest options, many savers will be surprised that their Nest pension is unlikely to be paid for them by Nest but by an insurance or a provider of investment pathways or advised drawdown.


Nest;- the Government pension that doesn’t pay a pension

There is £20.9bn in Nest and around one in three working adults in the UK has a Nest account. According to Nest’s internal research, many savers think as they are saving into the Government’s pension scheme, they will be getting a Government pension. They won’t.

Aviva estimate that 9m of us boomers will be looking to start spending our retirement savings pot in the next ten years, Nest will be having several million savers using the service I have explored this weekend.

Right now, the options available to people are limited. Most people would be better off transferring their funds to a SIPP with low charges , good investment options and the full range of retirement income payments. This is not what should be happening from the Government’s pension scheme.

We urgently need a default pension option that Nest savers looking to take a regular income from their pension savings, could transfer into. The Guided Retirement Fund could be built upon to provide this service but it is far from there yet.

Nest has made some noises that it might be interested in providing pooled longevity insurance from a CDC decumulation option and this looks a possible way that the Guided Retirement Fund could develop.

Right now, people looking to retire from Nest, have very limited options – and that is no longer good enough, Nest needs to be allowed to raise its game for its over 55s.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Nest – the Government’s pension that can’t pay you a pension.

  1. ian layton says:

    I’d never even heard of Nest till you mentioned it some months ago in one of your CDC pieces. I had got lost in the dingy mire of small-time self-employment before auto-enrolment was much of a thing.. Nest seemed like a beacon of hope, bringing thrifty workers at all stages of their employment journey a fair return on their work-time savings and a welcome addition to their SRP, and all achieved and delivered as effortlessly. I should have known better, and now you’ve shown us, it ain’t there yet. Keep up the good work!

    • henry tapper says:

      I am sorry I have given this impression. Nest is good and a great place for the self employed to build a retirement pot- it is not Nest’s fault it cannot pay pensions- the Guided Income product is probably the best it can do now- but there is so much more to be done!

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