NEST Pension UK: Fine for Some, a Tax for Others
13 million workers have a NEST pension. For half of them it's fine. For the other half, the 1.8% contribution charge is quietly costing thousands a decade.
NEST default vs cheap SIPP: £50k pot, 30 years
| Pension | All-in fee | 30-year value (7% nominal) | Withdrawal flexibility |
|---|---|---|---|
| NEST Retirement Date Fund | 0.30% AMC + 1.8% on new money | ~£328,000 | UFPLS or flexi from 57 (2028) |
| Trading 212 SIPP (global tracker) | ~0.15% all-in | ~£353,000 | Full drawdown from 57 (2028) |
| Vanguard SIPP (FTSE Global All Cap) | ~0.27% all-in | ~£341,000 | Full drawdown from 57 (2028) |
| Hargreaves Lansdown SIPP | ~0.57% all-in | ~£312,000 | Full drawdown from 57 (2028) |
Assumes no further contributions. With ongoing contributions the NEST gap widens because the 1.8% charge bites every new pound.
Key takeaways
NEST is the auto-enrolment provider of last resort, holding pensions for 13 million UK workers. For low earners with small pots it is fine - cheap enough, well-governed, hard to mess up.
The 1.8% contribution charge is a tax on new money going in. The 0.3% annual charge is fine. Together they cost a middle earner roughly £20,000-£30,000 over a working life compared to a 0.15% SIPP.
If your pot is over about £10,000 and you have left the employer who pays into NEST, transferring to a SIPP is worth considering on the maths. If you are still being paid into NEST, many readers keep the contributions flowing and move the bulk later.
Stay in NEST if the pot is small, earnings are low, you would raid the money if access was easier, or your only employer contribution route is NEST.