NEST pension review for employers: charges, pros and cons

Nest (the National Employment Savings Trust) costs employers nothing to use. Members pay two charges: 1.8% on every contribution and 0.3% a year on the value of their pot. It is the UK’s largest workplace pension scheme and must accept any employer that agrees to its terms, which makes it a common choice for small employers meeting their auto-enrolment duties.

What does Nest charge?

Nest charges members two fees and charges employers nothing. Nest’s charges page lists them as follows.

Nest’s adviser guidance says “neither you nor your clients will pay fees to set up or use Nest”. It also says there is no charge to transfer a pot in, change a retirement date or switch funds.

What do the charges cost in pounds?

On Nest’s own worked example, a member who pays in £1,000 over a year and has a £10,000 pot pays £48 in total. That breaks down as:

• Contribution charge: 1.8% of £1,000 = £18
• Annual management charge: 0.3% of £10,000 = £30
• Total: £48, just under 0.5% of the pot

The contribution charge weighs most on new and small pots, where contributions are large compared with the pot. For a long-serving member with a large pot, the 0.3% charge does most of the work, and Nest’s total cost falls as a percentage.

How big is Nest and how has it performed?

Nest is the largest workplace pension scheme in the UK. Its 2025/26 annual report highlights give these figures at 31 March 2026:

• Net assets: £62.9 billion, up from £49.8 billion a year earlier
• Members: 14.0 million, of whom about 4 million were contributing
• Contributing employers: 532,000
• Contributions in 2025/26: £8.6 billion (£3.9 billion from members, £3.7 billion from employers, £1.0 billion tax relief)
• Default fund return: 13.5% for the year and 8.5% a year over ten years for the 2046 Nest Retirement Date Fund, after the annual management charge

The same report shows employer satisfaction at 57%, against 77% for members. Nest says it is working on the causes of a year-on-year fall in employer satisfaction.

Which funds can members choose?

Most members stay in the default Nest Retirement Date Fund matched to the year they expect to retire. Members can switch free of charge to other funds. Nest’s fund performance page shows these five-year annualised returns to 30 June 2026:

Past performance does not guarantee future returns.

Pros and cons for employers

Nest suits most small employers, but it is not the only option. Weigh these points.

Pros

• No set-up or ongoing fee for the employer.
• A public service obligation in its scheme rules means it is open to every employer, however small.
• It meets the criteria for a qualifying auto-enrolment scheme.
• Simple, published charges and a free choice of funds for members.
• Scale: £62.9 billion of assets and a ten-year record on the default fund.

Cons

• The 1.8% contribution charge makes Nest more expensive for members with small pots than a scheme that charges only an annual fee.
• Members bear all the costs, so a scheme with a lower charge can leave staff with more.
• Employer satisfaction was 57% in March 2026, so check how it fits your payroll before you commit.

Which applies to you?

Use this as a quick guide.

• If you are a micro or small employer with no adviser and want a free scheme that will accept you, Nest is a straightforward choice.
• If your staff are mostly new savers on modest pay, compare the total cost on small pots, since the 1.8% contribution charge matters most there. See Nest vs The People’s Pension.
• If you want salary sacrifice or a tailored scheme, compare providers first. Our workplace pension providers comparison sets out the options.

What employers must pay into Nest

Choosing Nest does not change your legal minimums. Under the auto-enrolment rules, GOV.UK says the minimum total contribution is 8%, with at least 3% from the employer. For 2026/27 the DWP kept the earnings trigger at £10,000 and the qualifying earnings band at £6,240 to £50,270, and on 3 November 2026 it confirmed the same figures for 2027/28.

Our auto-enrolment guide covers the duties step by step, and the pension tax relief calculator shows what relief adds to a contribution.

What to do now

1. Check your duties. Confirm which staff you must enrol and from when.
2. Compare total member cost. Model the charges on a typical new joiner’s pot, not just the headline rate.
3. Test the payroll link. Confirm your payroll software can send contribution files to Nest.
4. Record your choice. Keep a note of why you chose the scheme for your declaration of compliance with the Pensions Regulator.

Frequently asked questions

Does Nest charge employers anything?

No. Nest says neither employers nor advisers pay fees to set up or use it. All charges come out of members’ contributions or pots.

What are Nest’s charges for members?

Members pay a 1.8% charge on each contribution and a 0.3% annual management charge on the value of their pot. Nest says there are no other charges.

Can Nest refuse my business?

Nest has a public service obligation written into its scheme rules, so it serves every employer that wants to use it for auto-enrolment and accepts its terms.

How has the Nest default fund performed?

The 2046 Nest Retirement Date Fund returned 13.5% in 2025/26 and 8.5% a year over ten years to 31 March 2026, after the annual management charge.

Can members transfer other pensions into Nest?

Yes. Nest does not charge to transfer a pot in, but the 1.8% contribution charge applies to new contributions, so check whether it applies to the transferred amount with Nest.

How much must I contribute as an employer using Nest?

At least 3% of qualifying earnings, within a total minimum of 8%. In 2026/27 qualifying earnings are between £6,240 and £50,270 a year.