Pensions Guide - NEST Scheme

NEST is one of the pension schemes you can choose to meet your workplace pension duties. It was set up by the government and if you choose NEST, they must accept you.

The Payroll Site can send your figures directly to NEST using NEST Web Services. We don't charge extra for this or any other pension features.

Signing up with NEST

You can sign up for NEST on their website.

When setting up NEST

  1. Note down the 'NEST employer ID' and 'payment source' as you will need them later.
  2. Set the 'pay period' to align to tax periods - see the table below.
    Pay Frequency How to set up NEST's pay period (or payment frequency)
    Monthly Choose the 'Tax Monthly' option. The older 'Monthly' option, ending on the 5th of the month, only works with File Upload.
    Weekly Choose the 'Tax Weekly' option. The older 'Weekly' option, aligned to tax weeks, only works with File Upload.
    Fortnightly Choose 'Fortnightly' and align it to the tax fortnight, so it ends on the last day of tax week 2, week 4, week 6 etc.
    Four Weekly Choose 'Four Weekly' and align it so it ends on the last day of tax week 4, week 8, week 12 etc.
  3. Remember which NEST pay period (or payment frequency) you chose, as you'll need to know later.
NEST uses a kind of tax relief called 'relief at source'. The amount contributed to the pension pot is made up of
  • the employer contribution
  • the employee contribution
  • tax relief on the employee contribution, claimed by NEST

If you enrol an employee without an NI number, NEST won't claim their tax relief unless you declare they are a foreign national.

Setting up The Payroll Site to Work with NEST Web Services

To add a NEST pension scheme:

  1. Click on the 'Workplace Pensions' option.
  2. Click the 'Pension Schemes' tab.
  3. Click 'Add Pension Scheme'.
  4. Click 'Edit Details'.
    • Name: Choose any name for your pension scheme
    • Type of Pension Interface: 'NEST Web Services'
    • Provider Reference: Leave blank
    • Employer Reference: Enter your NEST employer ID
    • Payment Source: Enter the 'payment source' name you set up with NEST
    • User Name: The username you use to log on to NEST's website
    • Password: The password you use for NEST's website
  5. Click 'Save Changes'.

If you have more than one payment schedule with NEST (e.g. weekly and monthly):

  1. Set them up on The Payroll Site as if they are different pension schemes.
  2. Give them different names (e.g. NEST weekly and NEST monthly).
  3. Use the same Employer Reference for both.

Next, add starting contributions for the pension scheme. These pension contributions will be used for each new member.

  1. Click the 'Starting Contributions' tab.
  2. If you pay the minimum pension contributions, choose 'Minimum Pension for Auto Enrolment' and click 'Add Pension Contribution'.

The above option works out the minimum employer contribution (currently 1% of qualifying earnings) and the employee contribution (0.8% of QE) with tax relief (0.2% of QE). These will automatically increase when the government increases the minimum contribution rates for automatic enrolment. Qualifying Earnings are a band of earnings starting at £486/m or £112/wk.

If you are not using the minimum pension contributions

  1. Select a contribution type from the dropdown list then click 'Add Pension Contribution'.
    • Employer Contribution
    • Personal Pension Contribution - This is an employee contribution*
    • Don't choose Occupational Pension Contribution as it has the wrong type of tax relief for NEST
  2. Set the 'Pensionable Pay' and 'Contribution' columns and click 'Save Changes'.
  3. Add more contribution types if needed.

* Employee pension contributions are often stated with tax relief added in, but the system needs the net amount. To do this, multiply it by 0.8. E.g. for a 2% contribution including tax relief, set up a 1.6% employee contribution and NEST will claim the extra 0.4%.

Alternative Option Using NEST File Upload

If you prefer to transfer the figures using CSV files, follow the instructions above except for 'Type of Pension Interface', choose

  • NEST File Upload (A) - If you have set up your NEST account with a pay period of Tax Monthly, Tax Weekly, Fortnightly or Four Weekly
  • NEST File Upload (B) - If you have set up your NEST account with a pay period of Monthly or Weekly

Enrolling Your Staff

Once you have set up the pension scheme, you need to know who to enrol. Ensure your staging date is set on the 'Employer' page and then, every pay run, the system will prompt you if you need to enrol anyone. For more information, see our guide on How to Assess Your Staff.

Sending Data to NEST

To send your data directly to NEST Web Services:

  1. Complete your pay run and click the 'Confirm Payments' button.
  2. Click the 'Pensions' tab. If there are enrolments or contributions to transfer, you will see the option to create one file or two. If there are two files, send the enrolment file before the contribution file.
  3. Click 'Create'.
  4. To view the contents, tick 'Show File' and then 'View Data'.
  5. Click 'Send'.
  6. After some time, NEST should accept the data.
  7. If anyone joins or leaves the pension, you will see a 'Mark as Done' button, which you should click to update the membership information.

Note: If you use NEST File Upload, there is a 'Download' button instead of a 'Send' button. For details, see our guide on How to Transfer Information to Your Pension Provider.