A pension scheme known as NEST (National Employment Savings Trust) has opened it’s doors to everyone wishing to build for retirement.
The pension was originally built as a simple and cheap fix for companies without a scheme for their staff, but excluded the self employed, however now it has opened it’s doors to everyone, it will allow those who are self employed to shave thousands off personal pension schemes.
Millions of self-employed workers can save £30,000 in pension costs by using this ultra-cheap plan.
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For many self employed, they would look at selling up later in life and paying their windfall into a penison ready for retirement, but often a pension pot of £100,000 would only give £5,000 a year income. Another alternative was to put aside a small pot of money every month.
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A major advantage to this scheme is that paying into a pension attracts tax relief and the Government will refund the income tax paid on contributions up to £50,000 (£40,000 from June 2013). NEST works out as one of the cheapest pension options for those who require a no frills plan.
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The main fee on the NEST savings is 0.3 per cent fund management charge (0.30pence per year per £100 in the pot). However, there is a temporary charge of 1.8 per cent on contributions which works on £98.20 of every £100 being saved. This temporary charge is siphonned off to repay the Government loan which was used to launch the scheme and this fee will be scrapped once the debt is repaid.
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A typical pension charge is 1 per cent but these can often be higher and in some cases can take up to a quarter of your final pot.
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