I am working in the UK. It's my first permanent job and I've discovered on my last payslip a line named NEST Pension Scheme. I googled a bit and I have discovered what it is but first, as it seems to have very cautious approach around the age 27 according to this video it seems to me plain wrong as it robs me out of the best coumpounding years I could get with a good portfolio approach (I'm saving a few £ every month on EToro). Second, I have no intent working forever in the UK. Should I opt out or am I missing something?

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    Pension schemes generally take your pre-tax income and also commonly have an employer contribution. Either of those things on their own make them hard to beat with a post-tax investment. May 23, 2020 at 12:49
  • @RobertLongson Hmm, so my employer is giving me extra money? Hmm good point for NEST then and thanks for your comment. But I won't stay forever in the UK though. How much taking that into account changes the verdict for NEST? May 23, 2020 at 12:52
  • There was an interesting section on NEST's "low returns for younger workers" somewhere in this edition of BBC R4's MoneyBox programme: bbc.co.uk/programmes/m000fwjh . As I understood it, it's based on some behavioural science that people who experience a significant loss early on in their investing career will opt out and not save enough in later life. This is of little comfort to those who understand what they're getting into and want to be fully "risk-on" in their early years though. I got the impression you can select a different allocation, if you take the trouble to do it.
    – timday
    May 24, 2020 at 11:03

2 Answers 2


You should almost certainly stay enrolled, because your employer will be contributing at least 3% of your earnings to your pension, and the government at least 1% (basic rate tax relief), in exchange for you contributing 4%. You won’t get a rate of return on alternative investments that makes up for losing the employer and government contributions. The downside though is that you can’t withdraw money until some time in your fifties, and money withdrawn is taxable as income.

  • Thanks for your anwer. What should I do when I will turn fifty, probably barely remembering that I was working abroad in the UK for a couple of years? May 23, 2020 at 12:54
  • @RevolucionforMonica Just keep the pension scheme updated with your contact details whenever they change, as you would have to for any investment.
    – Mike Scott
    May 23, 2020 at 13:00
  • I think that my employer automatically registered me to this pension scheme, should I ask for what details he provided? May 23, 2020 at 13:02
  • Yes, those extra employer and government contributions are basically free money that give you 100% interest rate. The OP definitely doesn’t want to leave that on the table.
    – Peter K.
    May 23, 2020 at 14:03

It looks like you can select a different fund within NEST:


For example you might choose the "Nest Higher Risk Fund" if you prefer to take more risk than their default allocation. Note that their funds are already bucketed by your age so may already be targeting a reasonable level of growth.

As the other answer says, you should definitely stick with NEST given the employer contribution. You could get the tax rebate ("government contribution") with another pension, but probably not the employer contribution.

Also note that once you stop contributing to NEST, e.g. when you leave your job, you can move the money to another pension that might give you more investment control: https://www.nestpensions.org.uk/schemeweb/memberhelpcentre/transfers/when-to-transfer-money-out.html

You can get a "SIPP" (Self-Invested Personal Pension), but check the charges carefully as many are quite expensive especially if you only have a fairly small pot of money.

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