stevio
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Post by stevio on May 31, 2017 12:02:36 GMT
Looking to compare a NEST Employer pension VS P2P IFISA from an employee's stand point
NEST
- Offers 1% Employer contributions for 1% Employee initially, moving to 2% and 3%, then 3% and 5% respectively - Employer contributions seem like free money
- NEST seems to have limited investment options, not looked into it, but guessing would be limited returns?
- AMC 0.3%, 1.8% of contributions
P2P
- No Employer contributions
- P2P returns around 12%
- No management or contributions charges
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bigfoot12
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Post by bigfoot12 on May 31, 2017 12:17:01 GMT
I don't know anything about NEST, but presumably you get tax relief now? If so you need to decide if your likely tax rate is going to be lower than the tax relief you get now.
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stevio
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Post by stevio on May 31, 2017 12:35:43 GMT
I don't know anything about NEST, but presumably you get tax relief now? If so you need to decide if your likely tax rate is going to be lower than the tax relief you get now. Yes NEST gets tax relief as a pension in the normal way My main concern was the return on investment as I think they will differ dramatically - compounded over many years, I think this is the biggest consideration
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Post by longjohn on May 31, 2017 13:23:28 GMT
Have you fully read the NEST website? NEST HomepageAs well as the standard age related retirement funds there are several other funds available including a 'high risk' fund which you can select yourself. According the the examples on the site if you save £20 your employer adds £15 and you save £5 tax on the lot so you have £40 actually invested. So you've doubled your money at the start before accounting for the investment growth. I doubt if p2p at 12% from your tax paid income is going to get anywhere close to competing with this. As a pensioner I would suggest you maximise your NEST savings and top up with p2p or a Help to Buy ISA. Aim for flexibility so that when the Gov changes the rules (they will, it's what they do) you'll be in the best place to adapt. J |
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Post by justdabbling on May 31, 2017 15:18:57 GMT
There is a 'Nest quarterly investment report' which can be found if you just put 'Nest performance' into google. For the quarter ending December 2016 this shows that almost all the Nest funds gained between 15 and 26% in the preceding year so they did better than p2p as well as benefiting from employer contributions and tax relief on entry. Of course past performance is no indicator of future performance!
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stevio
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Post by stevio on May 31, 2017 16:05:04 GMT
There is a 'Nest quarterly investment report' which can be found if you just put 'Nest performance' into google. For the quarter ending December 2016 this shows that almost all the Nest funds gained between 15 and 26% in the preceding year so they did better than p2p as well as benefiting from employer contributions and tax relief on entry. Of course past performance is no indicator of future performance! Not sure there actually figures, rather predicted/target returns. The 'since launch figures vary from 0.5% to 14% (if that is the actual return so far)
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Post by longjohn on Jun 1, 2017 12:22:28 GMT
There is a 'Nest quarterly investment report' which can be found if you just put 'Nest performance' into google. For the quarter ending December 2016 this shows that almost all the Nest funds gained between 15 and 26% in the preceding year so they did better than p2p as well as benefiting from employer contributions and tax relief on entry. Of course past performance is no indicator of future performance! Not sure there actually figures, rather predicted/target returns. The 'since launch figures vary from 0.5% to 14% (if that is the actual return so far) The NEST website gives full historical monthly valuations for each fund. See 'Unit Prices' at the bottom of the page I've linked. The investment rational for each is given in the quarterly investment reports. These look good. I've compared the factsheets with some of my Investment Trusts on Trustnet and I'm impressed by the quality and depth of data. NEST FactsheetsJ
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dermot
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Post by dermot on Jun 1, 2017 21:59:26 GMT
I retired, started drawing my occupational pension then went back to work 5 years ago. I've been paying (as has my employer) into NEST for the last 4 years - I've always paid the additional maximum annual amount in.
Since I've been above the 40% tax limit, I've found it useful to dump P2P income into NEST to reduce my tax liability.
Once I'm fully retired, I'll just draw down from NEST in amounts that keep me below the higher rate threshold.
I've let NEST pick the default retirement date fund - I could have made a lot more by going for a higher risk fund, but think I'm exposed to quite enough risk in P2P anyway.
An IFISA may well beat NEST, I suspect, depending on your tax situation. But if you are in higher rate and park an addition £1,000 into NEST, HMRC will add another 20% for you a few days later then, at the end of the year, you claim back another 20% so you have a net £1,200 pot for a net investment of £800 - actually, not quite that good as there are some modest management charges. Once you start to draw down, the first 25% is free of tax and the remainder is at taxed at marginal rate.
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