Tofu,
There are, in my opinion, many superior options to NEST out there. And you're right.. auto enrolment legislation forbids an employer from telling/implying/suggesting (an employee) that investing in a pension is a good or bad idea. SME don't have the money, resources, time to focus on yet more red tape and this is yet another bureaucratic burden that many can ill afford. I agree with the sentiment though. If a civvy worker earns approaching £1m in a lifetime but ends up with just £25k in a pension, something's wrong.
At present the initial NEST annual charge is 0.3% but there's an additional annual 1.8% also applied to cover various other blah. Younger workers are invested (by default, they can switch) to target returns only greater than inflation plus 3% and costs. In essence, the people who run NEST are more afraid of faint hearted 20 somethings leaving NEST because they don't understand that you take risk in the early years in return for your fund to buy units with high volatility cheaply to get traction.
Most of them being inappropriately invested into a short term bias strategy is wrong for them - we sometimes forget that capacity and inclination for investment risk works both ways. There are lots of really good options out there, if you haven't already done so and by way of information, the Scottish Life/Royal London proposition is well worth looking at. It invested heavily in NEST-esque infrastructure 5 years ago.
The RAF took the tri-service lead in a brilliant impartial and objective financial education presentation which was on the go a few years ago - but it withered on the vine when those who got it going were posted. I know it was a brilliant programme, I did most of the presentations
. The content was superb and generated entirely by the Consumer Financial Education Board (which re-rolled into the hideous Money Advice Service).
The suitability or otherwise of AVC/added pension depends entirely on the numbers - after that, they stand or fall based on the merits, or otherwise, of an AVC in principle. The biggest single issue I have with AVC is that the scheme member, usually the husband, has all the retirement savings in his name, and his wife has none. Consequently, the tax liability in decumulation (ie; when you're on the beach) is a shocker for the alpha male whilst the personal allowance for 'the wife' goes untroubled. It's vital to start planning early, absolutely vital.
Right or wrong, I started personal pensions for my three eldest when they were teenagers (with financial input from their grandad's gifting strategy!). Now, in their mid twenties, it's up to them but the spectre of working until north of 70/72 is a bleak one. Bear in mind too, that unless you hit AFPS normal retirement age of 60, deferred benefit legislation kicks in which means any deferred AFPS 15 benefits are already, automatically and statutorily tied, by default, to the state retirement age.
So, if your state pension shifts to the right and you stage in at 71, so too, do your AFPS 15 deferred benefits. In other words, you get the state pension at 71, you get deferred AFPS15 benefits at 71. That represents a huge legislative risk and a massive planning black hole. Personal pension benefits too, will be pegged to it, but drag by ten years. That will affect anyone currently under 40 or so. In terms of Downsizer's quandary, it'll be interesting to see the numbers for what are, essentially, '15 AVC.