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Nest pension - how it works

Nest is one of the biggest pension schemes available to employers to offer their staff a way to save for retirement. Here's how it works.

In this article
What is Nest pensions? How do master trusts work? How much can you pay in via Nest?
What are Nest's fees? Can I transfer my pension with Nest? Where can I invest my pension with Nest?

What is Nest pensions?

Nest stands for National Employment Savings Trust. It is a low-cost workplace pension scheme that has an obligation to accept all employers that want to use it.

It was set up by the government to make the process of pension auto-enrolment easier for employers.

Nest is technically known as a 'master trust'. This guide explains how Nest works, how much you can pay in, how much it costs to use, and where you can invest your pension savings. 


How do master trusts work?

A master trust is a type of defined contribution pension that can be used by multiple employers – with independent trustees who look after pension savings on behalf of all the employees who are members.

So you might find that you have the same pension as your neighbour, even though you work for different companies. 

Although the major decisions are taken by the master trust, your employer can still make decisions about contributions, investments, and benefits.

Many employers have chosen to use a master trust pension scheme to automatically enrol their staff into a pension, rather than set up and run their own workplace pension scheme. 

How much can you pay in via Nest?

Contributions into Nest will be the same as they are for other defined contribution auto-enrolment schemes, in that you pay a percentage of your salary into your Nest pension scheme.

The government sets the minimum amount you can pay in, which we've shown in the table below. Visit our guide to pension auto-enrolment to see how this works in detail.

Other people, such as family and friends, can also pay into Nest for you. 

Like all other workplace pension schemes, you’ll receive tax relief on pension contributions from the government.

Period Employer minimum contribution Staff contribution Total minimum contribution
6 April 2018-5 April 2019 2% 3% 5%
6 April 2019 onward 3% 5% 8%

What are Nest's fees?

Nest's charges are relatively low. There are two charges for employees who use Nest:

The first is a 0.3% annual management charge.

The second charge is a 1.8% charge on each contribution. This means that for every £50 you contribute, £49.10 is paid into your pension. 

This charge is in place to pay back the government loan used to set up Nest.

Can I transfer my pension with Nest?

There are no charges for transferring pots into Nest – you’ll only pay the standard annual management charge of 0.3% on your transferred fund.

The minimum you can transfer in is £50. There are also no charges if you want to transfer pots out of Nest.

Where can I invest my pension with Nest?

There are six fund types available through Nest. The Nest Retirement Date Fund is the one that most members stick with, which works by enrolling members into the fund that targets the year they expect to take their money out of Nest.

The Retirement Date Fund aims to target investment returns in excess of inflation after all charges, over the long term.

Nest also offers additional fund choices. These are:

  • Nest Ethical Fund
  • Nest Higher Risk Fund
  • Nest Lower Growth Fund
  • Nest Pre-retirement Fund
  • Nest Sharia Fund
  • Nest Retirement Date Fund
  • Nest Guided Retirement Fund