In terms of performance, Nest’s 2046 Retirement Date Fund, the default representing members in the growth phase, has delivered 10-year annualised returns of 8.5 per cent. This is ahead of Nest’s long-term objective, of achieving returns at least 3 percentage points above inflation. Over the same period, inflation averaged 3.5 per cent, meaning the target return was at least 6.5 per cent.

Nest recently announced that it was further extending its investments into private markets with a new £200m venture capital allocation with Schroders Capital which includes direct investment into UK venture opportunities, to help British-based start-ups expand and scale.

In terms of performance, Nest’s 2046 Retirement Date Fund, the default representing members in the growth phase, has delivered 10-year annualised returns of 8.5 per cent. This is ahead of Nest’s long-term objective, of achieving returns at least 3 percentage points above inflation. Over the same period, inflation averaged 3.5 per cent, meaning the target return was at least 6.5 per cent.

Nest recently announced that it was further extending its investments into private markets with a new £200m venture capital allocation with Schroders Capital which includes direct investment into UK venture opportunities, to help British-based start-ups expand and scale.

Nest CEO Ian Cornelius said Nest is focused on using its scale to improve outcomes for low-to-moderate income savers while building confidence and engagement with pensions”

He adds:

“One in three of the UK’s working population has a pension pot with Nest, and that’s a responsibility we take very seriously. I am proud of the progress we have made over the past year, evolving and strengthening the services we provide to both our members and employers.

“Behind the scenes we’ve been taking important steps to develop our retirement proposition, including plans to introduce flexi-access drawdown and create new solutions that give members greater certainty in later life.

“As the pensions landscape evolves, Nest will be at the forefront of progress, building a scheme fit for the future, delivering for our members to and through retirement.”

Brendan McCafferty, Chair of Nest Corporation adds:

“Over the past year Nest has continued to grow, deliver strong long-term returns and invest in the services our members and employers need for the future.

“Nest exists to help millions of everyday savers achieve better retirement outcomes. Our scale gives us access to investment opportunities that can support strong long-term returns while also contributing to the UK economy. We now have more than

£13bn of our members’ savings are invested in UK assets, helping finance businesses, infrastructure and growth across the country.

“This year, our flagship fund delivered returns ahead of our long-term target, showing the value of a patient, diversified investment approach. We’ll continue to look for opportunities, including in private markets and UK assets, that can help deliver for members, now and into the future.”

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Why CDC?

Nest does offer choice for those who want it. There are 50 choices but no one uses them.

The headline’s from Professional Pensions.

Nest is used as if it were a Collective Fund rather than 14m+ pots. When it launches its decumulation option it will pay people very much like a CDC scheme with an expected income that increases in line with what the fund can afford. I refer to the press release’s announcement which I’ve put in bold.

The underlying target for the fund is inflation +3% which means 6.5% over the past 1o years. It has achieved inflation +6.5% . If it were a CDC plan – shedding its surplus and deficit against its target. It would be paying increases in accumulation and decumulation averaging CPI +2%. I recognise Nest’s way of reporting and it is nothing like what the regulators are introducing for DC plans. It is reporting as CDC are reporting with Royal Mail and how UMES plans will report when they go live early next year.

CDC proprietors  should not target taking  business away from Nest , Nest is a  CDC scheme in all but name. Paul Todd has told us that the increases Nest will pay to those drawing their wage in retirement will be what it can afford to pay. This is a CDC style promise. Were it not for Nest offering transfer value to those in retirement and insuring longevity with Rothesay, I would call Nest a CDC plan in name.

There are upsides to offering people a pot value as well as a pension in retirement; there are also downsides. Nest is a scheme for people who don’t want to take decisions.

I do not expect a lot of people to do anything but what the default option offers them. They never have and I suspect they never will.

The employers who defaulted their members into Nest’s pension aren’t likely to transfer away from Nest either!