What is a NEST Pension?

26th March 2020

Assessing your employee for eligibility for a workplace pension is a legal obligation of any employer.  As part of PC Payroll & Legal’s payroll services we regularly assess employees on behalf of their employers and offer a comprehensive pension administration for those employing nannies and other domestic staff and small businesses.

While we can assess employees for any pension scheme here at PC Payroll & Legal we use NEST.

What is a NEST pension?

NEST (National Employment Savings Trust) is a contribution-based pension scheme set up by the government. Employers and employees make NEST contributions to a NEST pension scheme. The government introduced the NEST scheme so that every employer can access NEST workplace pension schemes that meet the standards set out in the new pension rules.

NEST pensions make the process of auto-enrolment as simple as possible.

How do NEST pensions work?

NEST pension contributions are deducted directly from your salary. No tax or National Insurance is deducted from the contributions, which is one reason why NEST pensions are an excellent long term investment.

The employer’s contribution is made on top of the employee’s agreed salary. A NEST pension scheme is a Retirement Date Fund and is created based on the estimated date of retirement.

When you retire, the NEST pension can be used to purchase an annuity, which generates a retirement income. You can also take out a 25% lump sum and buy a smaller annuity.

If an employee changes job, they can transfer the NEST pension to another scheme or transfer other pensions into a NEST pension they already have.

You can log in to your NEST account online using your National Insurance number and NEST ID. You can then take the following actions:

  • Check the value of your pension pot
  • Check your personal details are right
  • Transfer your pension pot to another pension
  • Make extra contributions
  • State where your money goes if you die

How much do NEST pensions cost?

A NEST pension scheme has two charges:

  • A 1.8% charge on each contribution
  • A 0.3% AMC (annual management charge) on the total fund value, each year

Employers must enrol employees in a pension scheme if they are eligible. However, employees can opt-out of the NEST pension within a month.

NEST self-employed pensions

You can take out a NEST self-employed pension, but there is no automatic enrolment, so you need to enlist manually. You will enjoy the same tax benefits but have greater flexibility with no minimum contribution limits. However, only you are making contributions, so you should consider the implications of this.

How can PC Payroll & Legal help?

Talk to a PC Payroll & Legal’s pension expert for help with NEST pension enrolment for your nanny, other domestic staff or for your small business.

Assessing your employee for eligibility for a workplace pension is a legal obligation of any employer.  As part of PC Payroll & Legal’s payroll services we regularly assess employees on behalf of their employers and offer a comprehensive pension administration for those employing nannies and other domestic staff and small businesses.

Need more help?

Contact us about your payroll or legal needs

We have a comprehensive range of payroll, pension and legal services to help you save time. Speak to our highly experienced and friendly team to get started.

Need more help?

Contact us about your payroll or legal needs

We have a comprehensive range of payroll, pension and legal services to help you save time. Speak to our highly experienced and friendly team to get started.

About PC Payroll & Legal

PC Payroll & Legal was established in 2011. We help families stay legal and save time with our nanny payroll, pension and legal services. We help small business owners and the self-employed focus on running their businesses by offering outsourced payroll, workplace pension administration, business administration, HR advice and legal services. 

PC Payroll & Legal is part of the Working Life Solutions Group of companies. The Working Life Solutions Group includes Your Employee Wellbeing which offers wellbeing support programmes for businesses of all sizes.

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