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NEST’s charges

NEST is a great value pension scheme.

It’s completely free for employers to use, with no charges to set up NEST or for ongoing administration.

It’s also free for professionals to provide a range of services to support employers with NEST through NEST Connect.

And it’s great value for members, with one simple charging structure for everyone. Because we’re run as a trust we don’t have to make profits for shareholders. This means that we charge just enough to cover our running costs.

Read NEST’s assessment of value for money, based on the approach set out by The Pensions Regulator.

How NEST charges work

We have the same low charges for all members. This stays the same whether a member is contributing or not, whatever fund they’re contributing to, and no matter how much is in their retirement pot.

These charges are made up of two parts:

  • an annual management charge (AMC) of 0.3 per cent on the total value of a member’s fund each year
  • a contribution charge of 1.8 per cent on each new contribution into a member’s retirement pot

So if a member’s pot is worth £10,000, they’d pay an AMC of £30. If £1,000 was paid into their pot over the year, the contribution charge would be £18.

The total charge would come to £48. That’s just under 0.5 per cent of the total value of their retirement pot.

Diagram showing how the annual management charge and contribution charge combine to make the total that NEST charges members.

There are no hidden charges or fees for saving with NEST. We won’t charge members for switching their fund, changing their retirement date, transferring their pot or any other services.

How our charges compare

NEST’s charges are low, but we still give members an award-winning investment approach that carefully manages the investment risk they take throughout their time with NEST.

Traditionally, schemes that offer this level of sophisticated investment were only available to higher earners or members of large workplace pension schemes.

The smart operations and economies of scale at NEST mean that we’re able to offer this to everyone.

A graph showing how NEST charges compare to stakeholder and other pension schemes.

Over a lifetime of saving with NEST our charges cause less drag on performance than either a standard stakeholder scheme charging the maximum or a scheme charging a flat 0.5 per cent AMC.

This means our members will see more of their contributions in their retirement pot and see less lost in charges.

Helping you compare charges

In line with best practice guidance, we’ve set out our charges in one document to help employers compare charges between workplace pension schemes.

Read information on costs and charges (PDF)

Fees and consultancy charging

We don’t allow consultancy charging from contributions or members’ retirement pots. That means professionals can set their own fees for providing advice about NEST. And we won’t charge you anything to use NEST Connect to help support your clients.

Find out more about NEST Connect

The effect of NEST’s charges on future savings

One way of showing how charges affect future savings is through reduction in yield (RiY). This shows how much of the final return of a savings product is eaten up by charges over time.

The graph below compares the effect of NEST charges with the typical charges that apply to other pension plans over different periods.

A graph comparing the effect of NEST charges with other typical pension plan charges over a period of time.

The graph is based on the following assumptions:

  • benefits calculated according to the Financial Services Authority basis
  • £50 contributions paid every month
  • average investment growth of 5 per cent per year
  • 1.8 per cent contribution charge throughout the term

The graph shows that our charges are broadly equivalent to an AMC of 0.5 per cent.

Many types of saver would be slightly better off with NEST’s charge level than they would be with a 0.5 per cent AMC, although some savers who are closer to retirement may end up paying slightly more.

Ultimately, the effect of charges on a member’s retirement pot depends a great deal on how much and how long they contribute.

Find out more about how members can make a difference to their savings.