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Can withdraw my nest pension early?

A Nest (National Employment Savings Trust) pension is a type of workplace pension scheme set up by the UK government. Known as a “Master Trust,” an employer is entitled to use the Nest scheme instead of setting up their own scheme if they so wish. In this Moneyfarm blog, we look at the possibility of Nest pension early withdrawal.


Can withdraw my nest pension early? – summary table

🤓 Is NEST a workplace pension?Yes
🎂 What age can I claim my Nest pension?Age 55
☝️ Can I withdraw my Nest pension if I leave the UK?Yes, your pension can be assessed online even if you move abroad
💸 When can I make withdrawals from a Nest pensionOnce a month

How workplace pensions started

Having some sort of pension in place for when you reach retirement age is essential. That is why the UK government set up the state pension scheme in 1909. But over the years, it became apparent that the state pension alone was not enough to sustain people in their retirement.

With many people unable to afford or be willing to set up a private pension scheme, the government introduced the workplace pensions, with auto-enrolment first being introduced in 2012.

When can I withdraw funds from my Nest pension early?

Put in place by the government to make the workplace pension auto-enrolment process easier, the response to the question of can I withdraw my Nest pension early is yes – you can withdraw a Nest pension early after reaching the age of 55 (57 in 2028). However, you must be in a pension fund such as the self-managed options.

With self-managed options, you need a balance of over £3,000 to make a withdrawal. You can only make one monthly withdrawal, and the minimum amount you can withdraw is £200. However, your Nest pension should have a minimum balance of £2,000 with each withdrawal. You must withdraw the entire pension savings if your pension pot is less than £2,000.

You can take out lump sums or the full amount, and 25% of each withdrawal is tax free, while the remaining 75% will be taxed. Withdrawing your whole Nest pension pot may require you to pay more taxes.

But the answer to the question – can I withdraw my Nest pension before 55, is no. Not unless there are extenuating circumstances such as being unable to continue working due to ill health or incapacitation.

How much will your Nest pension be worth?

Your Nest Pension is one of the many pension options open to you and will be paid in addition to your state pension when due.

You can choose the size of your Nest pension contributions. The legal minimum is 8% of your qualifying earnings. You must contribute a minimum of 5% while your employer must make up the balance – in this instance, 3%. Your employer may contribute more if they wish to do so, including some or all of your personal contributions.

If you would like to know how much your Nest Pension will be worth, by logging into your online account, you can then use the Nest pension calculator on the Nest Website.

If you want to take other pensions (state and/or private) into account, you can use the MoneyHelper pension calculator.

The Nest website

To find out more about Nest pension withdrawal before 55, Nest encourages you to “visit our website.” They have a powerful search engine at the top RH corner of each webpage. If you type 2 or more characters into the box, it will list possible searches.

Don’t worry about cookies. As the website says, “cookies are necessary for the operation of our website,” and you can use the additional cookies to understand the Nest guided retirement fund.

The Nest guided retirement fund

This fund is an option for Nest members aged from 60 to 70 and who have a minimum of £10,000 invested. You can withdraw from a Nest guided retirement fund if funds are available. To make a withdrawal, you need to switch out of the Nest Guided Retirement Fund and choose a different retirement option.

The fund switch takes 3 – 5 business days. You can opt back into the Nest guided retirement Fund if you meet its requirements. You can withdraw once a month; the minimum withdrawal amount is £20. It takes 5 – 10 business days to receive your withdrawal. However, once you take money out of a Nest pension, your tax-free allowance drops to £4,000.

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Choosing an option like this guided retirement fund can be of significant financial benefit.

Combine all your pension pots in one place

You can do a pension transfer from a previous employer not using Nest to your current employer-provided Nest scheme. You’ll find the “Transferring into Nest ” option on the Nest website informative.

Can you opt-out of Nest?

Yes, you can. To opt out of being automatically enrolled in a Nest pension, you must do so before the opt out period expires. It starts three days after your enrolment, and the time updating details opting out window lasts for one month. After it’s expired, you can stop making contributions, but you won’t be able to access any of your funds until you reach 55.

Having Nest contributions refunded after opting out

Although taking money out of Nest before 55 is not normally an option, if you opt out within the set timeframe, Nest will return any contributions you have made to your employer. Therefore, your employer should return them as well.

If you still have questions about a Nest pension, you’ll find a FAQ section on the member help centre page on the Nest website.

Start a chat if you can’t see the topic you have a query against. The online help centre web chat facility is your best bet. It’s staffed from 8 am to 8 pm Monday to Sunday.

Planning your 50s retirement savings

In addition to contributing to your state and Nest pensions, there are other ways of organising 50s retirement savings, including setting up a self-employed pension.

If you have decided to become self-employed and want to transfer your old workplace or Nest pension into a new self-employed pension, we here at Moneyfarm can help with that free of charge.

Other investment options

Of course, a pension is not your only option when it comes to how to invest money. In the same way that most workplace pensions and SIPPs invest funds in stocks and shares, you can set up your own Stocks and Shares ISA. It does allow you the benefit of accessing your money as and when you need it, but you do need to be disciplined.

Managing your money in retirement

Taking funds out too early can damage your retirement aspirations, so it might be a good idea to start a general investment account. On the other hand, deferring your state pension might be an option your way to consider for various reasons.

One thing is sure, which is the need to plan your retirement carefully. For unbiased, expert advice on retirement planning, We here at Moneyfarm can help.

FAQ

Can I withdraw my Nest pension before retirement?

Yes, you can withdraw your Nest pension before the state pension age. The earliest you can withdraw from your Nest pension is 55. 

Can I change my Nest retirement date?

Yes, you can change your Nest pension retirement date. However, the new retirement date needs to be after your 55th birthday.

How will I know when to take my money out of Nest?

A reminder will be sent to you 6 months prior to your intended retirement date. If there is no response, a second reminder will be 3 months before your intended retirement date.

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