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I am a lover of NEST– of collective DC – of private and public partnerships that bring better funded pensions to people for whom the current system cannot reach.

I have made my own private submission to the Work and Pensions Select Committee and made a promise in doing so not to publish what I have submitted but in broad terms my point is this. If NEST is to be set up with a loan facility of up to £600m from the DWP (currently £120m has been drawdown) and if that money is going to have to be repaid by NEST members, then how that money is spent is the business of NEST members.

Sponsoring companies using NEST and NEST members are unlikely to be turning the spotlight on NESTCorp’s accounts or asking the kind of questions the Work and Pensions Select Comittee are asking in their current consultation. These questions shuld be being asked by NEST’s Trustees who must be worried at the extent of the debt the Scheme is racking up and the implications for member pension outcomes.

We might like to think that NESTCorp is a gigantic quango whose cost is dispersed across the 3o m UK tax payers, it is not. It is a self-supporting mutual. In other words, all the money that NESTCorp spends on itself, on setting up this mega-pension and on managing it is charged to its members.

NEST is collecting repayments of its (current) £120m debt at the rate of 1.8% of contributions received. To repay the current principal of £120m, NEST will have to take a charge on over £6,000,000,000 of contributions. This is without considering the interest on the loan.

To date NEST has been a very expensive luxury. Now it needs to deliver. It needs to lead the way in showing other qualifying schemes how auto-enrolment can work. It needs to demonstrate genuine innovation in terms of investment, member communications and in the decumulation of member pensions.

Within a couple of months, Tim Jones and Laurence Churchill are going to need to answer some hard questions from a Parliamentary Select Committee as to just what we have got from the £120m we’ve spent so far and we might expect to get if the remainder of the £600m loan from the DWP is drawn down.

Blogs like this are to ask questions of Government in situations like this but the questions should be picked up by NEST’s own trustees, by financial journalists and by pensions consultants who are considering advising their clients on whether or not to invest in NEST.

I am a pension consultant and I am asking  as an adviser and as a potential NEST member – is that £120m money well spent?

What NEST’s staff GPP really costs us (henrytapper.com)

• Buy now while IFAs last? (henrytapper.com)
• Worrying times for NEST (henrytapper.com)
• Money makeover: Almost 30 and no pension (confused.com)
• The workplace pension changes that affect you (confused.com)
• Pension savers switched to new products to generate commission (guardian.co.uk)
• “Buying a Retirement Income” from an RIP (henrytapper.com)
• New Nest pension ruffles workers’ feathers (independent.co.uk)
• New govt pension scheme could be risky for savers (confused.com)
• Should employers be bothered about their pensioners? (henrytapper.com)
• Money Basics: Controlling Debt (michiganlendingnews.com)
• CDC pensions could happen – if we put our minds to it. (henrytapper.com)
• New national pension scheme gets the go-ahead (confused.com)
• General Melchett’s fancy DC defaults (henrytapper.com)
• New pension rules ‘risk a mis-selling scandal’ (telegraph.co.uk)
• Work and Pensions Select Committee announces enquiry into PIP (gmwrag.wordpress.com)