NEST – an explanation please!

nest future retirment

yes – but what of “assurance” for NEST’s members today?

Yesterday I jokingly referred to the Pension Regulator as the Pension Troublemaker. Its announcement yesterday of a “Directory” of two spells trouble for master trusts who are not on their way to getting the Master Trust Assurance Framework (RRP £15-100K -do shop around!). It also spells trouble for NEST as awkward journalists and bloggers ask why it hasn’t got round to getting the MAF itself.

Infact, Professional Pensions did ask this question and got this rather oblique response that NEST intended to be…

“independently audited in accordance with the AAF 02/07 framework later this year”

Which doesn’t quite answer the question! Does this mean they are going to set up their own standard (as they do on their uncommon data standard) or does this mean they are finally gong to come in line with what the Regulator asked master trusts to do in May 2014?

Well we’ve now had clarification that they do mean they’ll be going for the MAF later this year, it’s in this document.

Either way it seems a pretty rum kind of a gig that that an organisation with a £14m grant and a £387m loan from public funds, is only now getting round to doing a job of work requested by its Regulator fifteen months ago.

Does this matter- well yes it does. If I was NOW or People’s Pension or SEI who have forked out to get themselves accredited with the standard , I’d be making more than a little noise about this. If I was one of the 47 other mastertrusts on the Professional Pensions list (and the many others that aren’t), I’d be telling myself , my shareholders and my members that if NEST can’t be bothered, neither can we.

All of which should be pretty embarrassing to the DWP, who fund not just NEST but the Pensions Regulator and who are pushing through their own set of quality standards designed to make a Qualifying Workplace Pension, a marque we can all trust.

Let’s be clear about this (and Lesley Tictombe, formerly of the FCA and now head of tPR knows this better than anyone, master trusts are exempt from almost all the onerous regulatory requirements that are set upon contract schemes. They have minimal reserving requirements, have lower Regulatory costs and do not have to pay a levy to FSCS.  Nor do they have to set up an independent body to scrutinise them as insurers do with their IGCs.

Consequently their members are not given the same consumer protections as those in contract based schemes. Members are not protected by FSCS and in the event of the failure and subsequent wind-up of a master trust, it would be the members-not the participating employers who would be required to pay the wind up costs. Duncan Buchanan of Hogan Lovells has written expertly on this.

So NEST’s tardiness is giving an excuse to the long tail of smaller master trusts to procrastinate on the MAF. In the meantime, we are beginning to see problems with some trust based QWPS as reported in the Telegraph and on this blog.

I am not holding NEST responsible for the behaviour of other master trusts but I don’t think they are setting a good example. As the beneficiaries of the aforesaid grant and loan which is coming from the public purse, I think they should be setting a good example.

So I call on NEST to make a full statement on why it doesn’t yet have the MAF and what exactly it means by it intending to be

independently audited in accordance with the AAF 02/07 framework later this year

Failing such an explanation I will call upon the Pension Troublemaker to kick NEST off its page of reputable providers until it does!

helen dean 2

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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4 Responses to NEST – an explanation please!

  1. George Kirrin says:

    In that usual obtuse way of modern-day “professions”, the ICAEW (who invented AAF 02/07 and its ilk) state that “AAF 02/07 does not constitute an auditing or assurance standard”.

    The accountants giving a non-audit opinion under this non-standard also say “Our opinion is based on historical information. The projection of any evaluation of the fairness of the presentation of the description, or opinion about the suitability of the design of the control procedures, to future periods would be inappropriate.”

    So your previous NEST contributions may be safe, but your future contributions may not be?!

    I would sum this up as gobbledegook, Henry.

    • henry tapper says:

      Thanks George, that is a magnificent piece of forensic work into the obfuscatory terminology of the assurance business!

      Obfuscatory is a good word, it is just what it means!

  2. Amanda Burden says:

    Surely all the time NEST doesn’t have the assurance reporting it undermines the whole standard
    Any master trust speaking to a smaller employer could simply say it isn’t a particularly helpful standard given the governments perceived own flagship doesn’t worry about it.

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