Claims around rising Nest charges risk overlooking the broader context of scheme growth, as total fees increased to £278m last year, up from £231.5m the year before.
Retail platform provider InvestEngine claimed that fees paid by the average Nest saver had increased six times when compared to 2016. However, this data, collated under a Freedom of Information request, is purely due to the size of these pension funds increasing over this period, with Nest’s charging structure remaining unchanged.
Nest, which now has around 13.7 million members, charges a 1.8 per cent contribution charge and a 0.3 per cent annual management charge.
InvestEngine allows customers to transfer pensions from major UK providers, including workplace schemes such as Nest. It says its platform charges no fees on DIY portfolios, with a 0.25 per cent annual fee on Managed and LifePlan portfolios, and no additional account, trading, withdrawal or FX fees. Meanwhile, ETF costs are separate and reflected in fund performance.
Its new managed portfolios are temporarily unavailable as it makes improvements to its portfolio-building questionnaire. It says its existing portfolio holders and ongoing expert management of its portfolios are unaffected and its DIY offering remains open.
InvestEngine says that Nest is now the most requested provider for transfers onto InvestEngine’s platform, accounting for 17 per cent of requests, with workplace schemes making up 66 per cent of transfers overall. This, though, may also be due to the fact that Nest is by far the biggest workplace pension provider in the UK. Overall, Nest has seen outflows of £2.7bn from nearly 610,000 transferred pots since 2017.
InvestEngine CEO and Co-Founder Andrey Dobrynin says: “The £278 million paid in charges by Nest members last year highlights how quickly fees can add up as pension pots grow.
“While workplace schemes play a vital role in helping people save for retirement, the proliferation of small pots as people move jobs, coupled with increasingly complex fee structures, means savers are increasingly reviewing their pensions and looking more closely at what they’re paying.
“Since opening up transfers from major workplace providers, Nest has quickly become the most requested provider for transfers onto our platform. That shows many savers are actively seeking lower-cost options and greater control over their retirement savings.”
“By making it easier to transfer to our platform – where we charge 0 per cent on DIY portfolios – we give investors the chance to consolidate their pensions and keep more of their money working for their future.”