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Nest Guided Retirement Fund

The Nest Guided Retirement Fund aims to provide you with a consistent income throughout your retirement years.

If you’re in this fund, you can take money out regularly. We’ll continue to manage your remaining savings. Our main aim is to reduce the risk of your money running out.

Watch our short video for details on how the fund works.

Who is this option for?

You can choose this fund if you're aged between 60 and 70 and have at least £10,000 in your pot. If this applies to you but you don’t tell us what you want to do with your pot at your intended retirement date, it's likely we'll move your pot into the Nest Guided Retirement Fund.

If this doesn't apply to you as your pot is less than £10,000, you could consider paying more money into it. You may have other suitable pension pots that could be transferred into Nest to reach the £10,000 minimum.

To choose the Nest Guided Retirement Fund, log into your Nest account and select it.

How does it work?

We divide the money in your pension pot into four funds – your Wallet, Safe, Vault and Later Life – each designed and invested differently to meet your needs throughout your retirement.

Your Wallet contains your everyday spending money, while your Safe holds money for emergencies or larger purchases. When you join, we put 10% of your savings into your Safe. You can access your Safe at any time. You can make up to one withdrawal per month from your Wallet to your bank account and up to a maximum of 12 withdrawals per year.

We invest the money in your Vault with the aim of growing your savings, so we can keep providing you with a regular income.

From age 65, each month a small percentage of your savings goes into your Later Life fund to make sure you still have a regular income when you’re aged 85 and over. This pot is designed to provide you with the money to buy a lifetime income product from age 85 if you wish.

The month and year you join the Nest Guided Retirement Fund, your age, and the size of your pension pot all determine how your money is split between these different funds.

What will my income be?

If you join the Nest Guided Retirement Fund, you’ll be asked to fill in some details either online or via letter. We’ll then calculate a sustainable level of income for you based on the amount you’ve saved and your age. We’ll move your money into the different parts of the fund – your Wallet, Safe, Vault and Later Life – in a way that works best for your retirement.

Let’s explore how the fund works in practice by looking at a few scenarios. They’re made-up examples to show you how your money is moved to different parts of the fund.

The examples are based on members of different ages and pot sizes joining the fund in July 2023.

Scenario 1: Nadia

Nadia, an administrator from Bolton, joins the Nest Guided Retirement Fund at the age of 66 with £10,000 in her pot. £523 is put into her Wallet for the year and she chooses to withdraw the full amount in one go.

A one-off amount of £1,000 is also tucked away in her Safe. She keeps this aside for any essential house repairs. Of her remaining savings, £8,318 is invested in her Vault and every month £13.25 goes into her Later Life fund to give her a regular income when she reaches the age of 85.

Scenario 2: Amir  

Amir, a technology support assistant from London, joins the Nest Guided Retirement Fund with £35,000 in his pot. He is 63 years old when he joins. £1750 is put into his Wallet for the year and he decides to take £437.50 out every three months.

He has £3,500 tucked away in his Safe, which he can dip into at any point. His remaining £29,700 is invested in his Vault to continue providing him with a steady stream of income throughout his retirement. When Amir reaches age 65, we move a small amount every month into his Later Life fund to give him a regular income when he’s 85 and over.

Scenario 3: Sally  

Sally, a therapist from Devon, was 67 years old in July 2023 when she joined the Nest Guided Retirement Fund. She has built up £35,000 in her savings pot. £1,862 goes into her Wallet for the year and gives her just over £155 a month to spend.

She decides to access the £3,500 in her Safe to replace her boiler before winter arrives. Of the remaining money in her pot, £28,535.50 is invested in her Vault while £42 per month is put aside for later life. Sally has retained some clients and as she is earning over £10k per year, she continues to make pension contributions. These contributions go into her Safe.

What are the benefits?

Sustainable income

We aim to make a stable and sustainable level of money available to you for you to withdraw until age 85. We leave a separate pot that can be used to purchase a guaranteed income for life. This should reduce the risk of your pot running out.

Easy access

You can make withdrawals online via the Nest website and have them paid directly to your bank account.

Flexibility

You can take your pot in full or choose a different retirement option at any time if you wish or your circumstances change.

Help to manage your income

We’ll send you an annual statement showing you the value of your savings and the income available to you. We’ll continue to manage your pot and invest your money with the aim of providing the same yearly income for you to withdraw.

Frequently asked questions

Is the Nest Guided Retirement Fund right for me?

We can't provide you with advice about whether the Nest Guided Retirement Fund is right for you. The information on this page or on our factsheet may help you make up your mind. It’s a good idea to seek professional guidance or advice before making your decision. You may be able to get free guidance from the Pension Wise service from MoneyHelper or use a financial adviser. Details of independent financial advisers can be found at unbiased.co.uk. Nest won’t be responsible for any fees you may be charged for this advice.

If you're not ready to retire and want to continue to save, you can change your nominated retirement date so it's in line with your plans. Your money will then be put into the Nest Retirement Date Fund that matches the year you plan on withdrawing your money. You can also switch to a different fund in our range. If you want to retire and you don’t think this fund is right for you, you can choose another retirement option.

Why am I already in the Nest Guided Retirement Fund?

If you're aged between 60 and 70 with at least £10,000 in your pot and you haven’t told us what you want to do with your pot at your intended retirement date, it's likely we've automatically moved you into the Nest Guided Retirement Fund.

How can I start taking an income from my Nest Guided Retirement Fund?

You can withdraw money by logging into your Nest account. Our help centre article How do I take money out of the Nest Guided Retirement Fund? takes you through how to do this.

How is the fund managed?

The fund is managed by our award-winning investment team. The team invests each part differently with the overall aim of providing you with a sustainable amount of money to withdraw each year. Our team reviews the fund strategy and how each part is invested every year to try and grow your money. The amount allocated to each part of the Nest Guided Retirement Fund is based on, among other things, investment performance, your age, and when you join the fund.

How do we set the income available to you?

Every July we review the fund and set a new income level for members joining the fund. The amount you can withdraw every year is based on multiple factors, including investment performance expectations.

Our aim to is set your income at a sustainable level so a similar amount of money goes into your Nest Wallet every year for the remainder of your time in the fund, up to age 85.

Investments may go up or down, depending on fund performance and future market outlook. If performance is stronger than expected, top-up payments may be made to your Safe and payments to your Wallet will remain the same.

How are withdrawals taxed?

Usually, 25% of each withdrawal you make will be tax free with the remaining 75% taxed at your marginal rate of income tax. We'll use your tax code to deduct tax, if necessary, before making a payment to you. The first time you make a withdrawal, where we don't have your tax code, we'll use an emergency tax rate in line with HMRC guidance.

If you're making withdrawals as well as continuing to make contributions, you may be liable to an additional tax charge if your contributions exceed £10,000 in a year.

Where does my money go if something happens to me?

If you’ve nominated a beneficiary or beneficiaries, or made an expression of wish, the money in your pot will usually be paid to them. If you die before the age of 75, this will usually be paid tax-free as long as it is under the lump sum and death benefit allowance of £1,073,100 across all your pension schemes. This allowance includes any serious ill health payments you’ve received. If you die over the age of 75, the amount will usually be taxed at your beneficiary’s normal rate of income tax.

More about nominating beneficiaries