Can I withdraw my nest pension before 55 or 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.

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 willing to set up a private pension scheme, the government introduced workplace pensions, with auto-enrolment first introduced in 2012.

When can I withdraw funds from my Nest pension early?

The government implemented the Nest pension auto-enrolment process to make it easier, and you can withdraw your Nest pension early. Therefore, the response to the question, “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 Nest pension 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 Nest pension 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 my 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.

Even though you can’t withdraw from a NEST pension before 55, it’s helpful to understand its potential future value. You can log into your online Nest account and use the Nest pension calculator on the NEST Website.

The Nest website

Nest encourages you to visit its website to learn more about Nest pension withdrawal before 55. At the top right corner of each webpage, there is a powerful search engine. If you type two 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.

How to withdraw money from Nest pension: 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 Nest pension withdrawal, you must 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.

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

How can I combine my pension pots in one place?

If you have a non-Nest pension from a previous employer, you can initiate a pension transfer to your current employer-provided Nest scheme. You’ll find the “Transferring into Nest ” option on the Nest website informative.

Can I 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 can’t withdraw from the NEST pension before 55 years of age.

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.

If you want more information about Nest pension or have a query, start a chat. The online help centre web chat facility is your best bet. It’s staffed from 8 a.m. to 8 p.m., Monday through Sunday.

Planning retirement savings at 50

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 at Moneyfarm can help you do so free of charge.

Other investment options

Of course, a pension is not your only option, nor is it the best way to invest money in absolute terms. 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. While you can’t withdraw from a nest pension before 55, the benefit of a stocks and shares ISA is that you can access your money as and when you need it. While there is no age restriction for ISAs, you must be disciplined with your finances.

Managing money in retirement

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

One thing is certain: You need to plan your retirement carefully. We at Moneyfarm can provide unbiased, expert advice on retirement planning.

FAQ

Can I withdraw my NEST pension now?

No, you cannot withdraw your NEST pension before the age of 55, as it’s subject to the UK pension regulations. However, you make a Nest pension withdrawal before the state pension age.

Can I change my Nest retirement date?

Yes, you can change your Nest pension retirement date. However, the new date must 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 before your intended retirement date. If you do not respond, a second reminder will be sent 3 months before your intended retirement date.