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Nest pension for self-employed

Self-employed person wants to be added to the Nest scheme

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Hi all,

This might be a bit of a stupid question and maybe I'm overthinking this, but someone who is self-employed wants to be added to their pension scheme which already has employees on and I'm not sure how ok that is. Obviously they are not on the payroll scheme, but I've spoken to Nest and they have said I can add the self-employed person just like if they are a normal worker. Are there any issues if I set up a new group with 100% contributions and then just submit figures as and when they want to make contributions for themself as those figures will not actually be submitted in the payroll? If there are issues, what would the correct method be (if there is a correct method)?

Should this idea just be abandoned altogether and a separate personal pension scheme set up? Any help / scolding for my stupidity will be appreciated.

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By SXGuy
17th Jun 2019 14:27

Last time I looked, a self employed person can't be an employee as well. So unless I'm missing something he can't be put on the same scheme as his employees.

Further to this how would you calculate his qualifying earnings and on what basis? He isn't an employee.
As far as I can see unless he is contributing on a weekly/monthly basis, nest will report him to the pension regulator for not paying, you cant just wait till whenever you feel like it.
But all of that is irrelevant since he isn't an employee. I'd not listen to what nest says I doubt they understand the difference.

Why can't he look in to a private pension scheme?

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to SXGuy
17th Jun 2019 14:40

Nest has specifically got a section on its website about placing yourself in to a pension scheme as a self-employed person so I presume they have some idea about what they're doing.

My idea would be just to set the contribution rate to 100% then when they want to contribute submit the pensionable earnings as that amount they want to contribute in the month and then nil for other months where no contributions. It would work then the same way as a regular private pension, but this way it's easier as direct debit is already set up and I can arrange the payment for them.

Of course I'm not convinced this is correct which is why I want to see if anyone has ever seen/dealt with this before.

Thanks (0)
17th Jun 2019 14:42

(1) "but I've spoken to Nest and they have said I can add the self-employed person just like if they are a normal worker"

(2) " About workplace pensions

A workplace pension is a way of saving for your retirement that’s arranged by your employer.

Some workplace pensions are called ‘occupational’, ‘works’, ‘company’ or ‘work-based’ pensions."

(1) it looks as though Nest representatives are like those who work for HMRC. Much depends on who picks up the phone and, what "knowledge" they have gained?

(2) auto-enrolment is surely "employee" based?

Yes, this idea should be kicked into the long grass and, the best advice to provide to the self-employed individual is to seek the professional opinion of an independent financial adviser in respect of arranging a personal pension policy.

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By DJKL
to Chris.Mann
17th Jun 2019 16:04

Chris.Mann wrote:

Yes, this idea should be kicked into the long grass and, the best advice to provide to the self-employed individual is to seek the professional opinion of an independent financial adviser in respect of arranging a personal pension policy.

Agree about not messing about with Nest but not sure about an IFA unless the figures are going to be significant.

A low cost online SIPP with say an index tracker or some EFTs will 99% of the time get the same or better results than paying an IFA from limited fund earnings/ assets in the early years and needing to match the index and cover fees out of early year income/growth to do better- of course we are not allowed to give clients this advice (well certainly I am not) but reality is an IFA's charges will really eat into the initial funds invested. ( like my whole of life policy that is still running after 22 years, my contributions for the first three years just covered the life cover and paid the IFA his fees with no growth in the underlying policy assets until all these costs had been borne)

Do not know if still published but handing the client a gift of the "Investor's Chronicle Beginners Guide to Investment" might be the best thing you ever do for your client (if he or she has any semblance of a brain)

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to DJKL
17th Jun 2019 17:01

Sound advice. As always.

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By puzzel
17th Jun 2019 19:52

But,but.
If they pay into a scheme as an employee, then in general the employer would also pay into a scheme!
So is it not a case of the employer (sole trader) getting a sort of double tax allowance?
I might be wrong , but I have my bullet vest at the ready.

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By SXGuy
to puzzel
18th Jun 2019 10:14

Self employed person can not be an employee. So that's a mute point.

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to SXGuy
18th Jun 2019 10:54

SXGuy wrote:

Self employed person can not be an employee. So that's a mute point.

No, but it might be a moot point.

NEST is a pension scheme. Like other pension companies, they'll accept money from anyone. Why the doubts ?

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17th Jun 2019 21:45

I asked the checkout operator at Tesco if I could join the Tesco pension scheme. They said I couldn't. Call that customer service??

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17th Jun 2019 21:58

If NEST say it can be done, I'm guessing it can be done.

But there's no obligation for the "employer" to contribute.

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18th Jun 2019 09:58

NEST has always been open to the self-employed, provided they meet the age and UK work requirements, and you don't need an employer, despite the name suggesting it's all about employment under a contract of service. You only need to read NEST's own checklist to see that you can have a scheme as an employer *and* pay your own self-employed contributions as well: https://www.nestpensions.org.uk/schemeweb/dam/nestlibrary/Self-employed-....

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