Nest Pension

[Mumrey]

I know it is Christmas Day but we had our lunch yesterday, so today it is relax and clear up in our house!

Hope someone can answer this. I have a tiny Nest pension (£5k) which which my last employer opened up. I took voluntary redundancy August 2020 and thus retired, I recently turned 63 and have no intention of returning to work. I have other investments and a couple of 'frozen' pension pots. Could I take the £5k and invest in my ISA S&S. I know I can take 25% tax free and pay tax on balance. I hope I am not drip feeding!

What’s your rationale for moving from one tax wrapper to another? Does your ISA have more competitive charges? is the fund choice better? Do you need your ISA to fund your retirement?

personally, I would look at all my DC pots (no such thing as frozen pots, they are all active) and consider consolidating them rather than move to ISA.

What do you want to use the money for? As above, what benefit do you see in moving the money?

The answer to your question is yes, you could move the £5k (minus fees) from the pension to the ISA. I just don't understand why you would want to do that.

Your NEST fees are 0.3%. A S&S ISA may have fees higher than that. So moving tax wrapper may not save in cost of fees.

Under the small pots rule, you can take out all the money from the Nest pension. The advantage of accessing via small pots rule is that it does not use any Lifetime Allowance. However is the Lifetime Allowance an issue for you?
Small pots access also does not trigger the Money Purchase Annual Allowance but is that important to you if you are not going to do any work again?

You could access the Nest Pension via UFPLS taking chunks out of it, 25% tax free and 75% taxable each time you access it. I don't know if Nest does UFPLS but if they do not then moving to a SIPP that does do UFPLS might be useful depending on your tax situation.

As per the other comments, I too do not understand why you would want to take money out and pay it in to a S&S ISA. What is the advantage you are seeing of doing that?
Maybe you are not fully using your tax free allowance this tax year so taking some money out and having that use personal tax allowance might be beneficial but the saving in tax payment now may be offset by the fees of the S&S ISA. The 0.3% fee that Nest charges is very competitive, though you could have a S&S ISA at a bit lower cost (Vanguard ISA with S&P 500 UCITS ETF could be 0.22%, 0.07% fund, 0.15% platform).
Look at what fund you are invested in at Nest and consider drawdown options if you want to access the money. I think with £5k in Nest you can use FAD (flexi access drawdown) to take money out, £200 minimum per withdrawal and only one withdrawal a month, until it is down to £2k when you then have to take it all out.

Thank you for all your responses, I will look into the questions raised and rethink.

great answer from nannynick OP

@nannynick I have to ask but were you on here under another username previously? Haven’t seen said user on the money section for quite a while and your ‘guidance’ sounds v similar!

I think i have had this username since 2005.

NEST doesn’t offer flexible access. However take the money when you want to spend it, no point otherwise.