Nest now has £49bn of our money under its fiduciary control.
It is doing something its rivals can only dream of
Mary McDougall’s excellent article
I am pleased for the Nest Team, Mark Fawcett, Elizabeth Fernando and Paul Todd. I am pleased for the not very Australian Greg McClymont who is the British face of IFM.
10% of IFM is now owned by Nest who become co-owners in assets around the world and can offer savers (such as me) the kind of investment opportunities we could never countenance on ourselves. For those who believe a self invested personal pensions can rival Nest in this capacity, I would reiterate the comments of Fawcett to the FT.
“We outsource all of our fund management now . . . why wouldn’t we partner with one of the world’s best infrastructure and private markets managers?” he said. “It’s that co-creation which is the key for allowing us to access world class investment capability at a price that is special for shareholders,”
Those are the words of someone who has self-confidence in investment and who recognises what UK savers know, that our country offers under-funded investment that Nest could help capitalise
Nest is of course one of those pensions where individuals (like me) take the rap if things go wrong. I am meeting up with them to discuss how with greater investment can come greater certainty of the outcome of our saving. It seems unfair that we are not rewarded in terms of “pension” rather than just a bigger pot.
It looks to me as if DC savers are being asked to bail out DB schemes. The observation is from FT’s Lex last week.
One reason the government is so keen on surplus cash being invested for growth is that scheme assets rarely are. In the past two decades, amid various regulatory changes, risk-averse trustees have shifted away from equities into bonds.
In 2024, the proportion of DB schemes’ investments in bonds was 70 per cent; in 2006 this was just 28 per cent, the Pension Protection Fund says. It is obvious that surplus cash, at the very least, could be used more productively, although rules around which schemes should be eligible will need to be watertight. The security of members’ benefits must remain the priority.
Although some of IFM’s money gets invested in private credit, the majority goes to infrastructure and private equity , by the end NEST wants to be 30% invested in private markets. Fawcett tells the FT Nest wants the bias of its investment to be the UK.
Nest has pledged a 30 per cent allocation to private markets by the end of the decade, up from a current level of 17 per cent. About 40 per cent of the fund’s £8.5bn allocation to private markets is invested in the UK. This is a lot higher than the 4% average invested in UK private markets by other “pension” funds.
Surely it’s approach to pension investing is an exempla for pension funds and surely in time Nest must extend its ambition to invest our money when we are drawing a pension.
Whether Nest embraces elements of CDC or goes further to offer capital backed DB benefits, we need to have the promised Nest Pension, not just a pot of money. I believe we have the capacity to offer those who are saving and drawing from their Nest pot a better deal than the current “promised Nest Pension”. Why settle for anything less than a proper pension that pays a secure monthly amount for as long as we are there to spend it!
