Yesterday was a good day for big pension schemes. USS finally gave back its pre 2022 benefit promise to its members, the Government are rumored to be putting the PPF to work and yesterday Mark Fawcett and Elizabeth Fernando celebrated Nest getting £30bn under management.
New CIO Fernando comes from the USS and has a history investing pension assets for growth. It’s clear from her tweet that she’s going to be working to improve returns for savers (like me) who want my money to be put to work in Britain.
Milestones like £30bn don’t come round often
The Nest pension scheme is Britain’s largest DC plan – almost £10bn bigger than any other master trust. It looks after the auto-enrolment of over 1m employers and has over 10m members.
Without it, auto-enrolment would almost certainly have run into grave trouble with private sector providers pulling up the drawbridge on the long tail of employers that staged after 2016
Nest and this blog have not always been friends.
Nest’s investment has had its hiccups, its rather silly nursery plan where young new joiners are inducted into a section of the default where they were “protected” from harm by investing in low risk assets like bonds (ahem!). Where woke behavioral nonsense has occurred – I’ve called it out. Where Nest has been less than frank about what they/we are paying for asset management – this blog and Chris Sier has called them out!
There have even been times when Nest and this blog have come to blows. Most famously when two of Nest’s PR team started a private discussion on the lack of merit of the blog in the comments section of the blog -oops!
We have come through all of this and even survived a threat of legal action after I said something rude about Mark Fawcett (the then CIO).
And there is so much more that Nest needs to do than just build up our pots. Many Nest savers, me included, are over 50 and looking at their pension pot with the interest you get when you think “what could I spend that on?”
Of course, a pot is supposed to buy a pension and that is Nest’s next big challenge.
Because for now, Nest only offers the most rudimentary of drawdown offerings, has abandoned its annuity carousel and has shown no signs of using its massive size to provide mortality pooling for those who want to make sure their money lasts as long as they do.
Nest a great work in process
Nest has got some work to do on the IT side, restoring a plan which was derailed by an abortive hook up with ATOS.
It has to repay a massive loan from the DWP, which will take another 15 years, based on these projections
And Nest will undoubtedly come under huge political pressure to seed the initiatives that Nicholas Lyons and others are cooking up, to get Britain working better.
But it is a stable ship. Helen Dean took over from Tim Jones but Nest has only ever had the two CEOs since it started out as PADA in 2008. It has similar continuity in its investment and operational divisions and its trustees too show stickability.
It has been notably free of scandals, has not had an IT hack and though clunky, it provides a clean interface with employers which works. I have complained over the years of Nest not working better with the industry but in certain areas, such as Nest Insight, it has provided thought leadership which has helped me and many others better understand the behavior of savers.
The achievement of gathering £30bn of assets , deserves rather more than the publicity it isn’t getting! Well done Nest – here’s to the next £30bn.