It is easy to poke fun at consolidation and the establishment of megafunds. It is not easy to create a pension fund that invests nearly a quarter of its assets as Nest does in Britain, in its infrastructure and production.
If we would have our megafunds continue to invest in low cost passive funds that send the money round the globe matching diversified equity indices then there might be an easier life for pensions. If global listed equities soaked up over £50bn of our national wealth, we would be asking different questions about how our economy is going to be financed to grow. By the time we have a new Government , Nest could be closing in on £100bn and the decisions it took to invest in areas which need its money will be praised.
Nest’s investments may include the equivalent of Thames Water but equally they might capture a stake in the next DeepMind
That DeepMind is now owned by Google rather than a British Pension is because back when it was sold, we had no investment in growth in British pensions. DB plans were “de-risking” and DC plans were heading for a price war that precluded any ambition in investment.
We cannot go on praising Canadians and Australians and Americans for investing in the UK when we show no aptitude to keep the jewels in our crown. I am proud to have some of my pension money invested by Nest and I look forward to more of my money invested in long-term British investments which need neither the liquidity required of pension freedoms or the liability matching of Defined Benefit plans.
Well done Nest , may People’s , Lifesight and L&G master trust, all of which are occupational schemes with more than £25bn in them, show the way for those who aspire to scale. May we find ways for money in group personal pensions to be invested in occupational defaults. May the new CDC funds find ways to invest in pension funds who deliver pension payments rather than capital to its member’s bank accounts.
I would like to think that consolidation around scale will happen, wherever the value of scale can be found. I think of USS, Railpen and LGPS as further sources of the kind of investment Nest is pioneering for DC.
This is major news that points Nest out as a pensions success. We should sing its praises as a British investor.
