NOW: Pensions comments on DWP consultation on future of NEST

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For immediate release: 7 July 2016

Today, the DWP announced a consultation on the future of NEST.

Commenting, Morten Nilsson, CEO of NOW: Pensions said: “Allowing NEST to provide retirement products could significantly distort competition in an already distorted market.

It’s important to remember that NEST was established with a Public Service Obligation using State Aid Funds to address the concern that there would not be enough commercial providers to serve the low-earner and small company auto enrolment market.

Its role was to be a provider of last resort with the intention that it should complement, not compete or replace, private sector providers.

In reality, these concerns have not materialised as auto enrolment competition has been vibrant. There are at least 70 other master trusts and around 30 insurers operating in the market and NEST has been competing well beyond a provider of last resort.

The Public Accounts Committee report into auto enrolment published in January noted that NEST’s business model is complicated and its sustainability and ability to repay its loan to the taxpayer is uncertain as it depends on how the market develops and how successful other providers are.

This highlights an inherent conflict for government in both monitoring the competition angle and ensuring that NEST is able to repay its loan. It also highlights the need for NEST to become sustainable financially.

The government has created and funded the largest auto enrolment provider that is now considering using its unique funding advantages to potentially engage in more profitable activities that will extend well beyond the target group of its Public Service Obligation.

The government needs to think carefully about the consequences of allowing NEST’s role to significantly expand and the impact it would have on the future shape and competiveness of the market.”

-Ends-

For further information:

Amy Mankelow / Cheriton Lee
NOW: Pensions
Tel: 0203 640 9075 / 0203 826 1464
amy.mankelow@nowpensions.com

Lauren Roberts
Lansons
Tel: 0207 566 9760
laurenr@lansons.com

NOW: Pensions www.nowpensions.com @nowpensions

NOW: Pensions is an independent, multi-employer trust serving thousands of employers and hundreds of thousands of employees from a wide range of sectors.

A subsidiary of one of Europe’s largest pension funds, Danish pension scheme ATP, NOW: Pensions offers a simple and cost effective workplace pension solution direct to employers and via advisers and the payroll sector.

In April 2013, NOW: Pensions became the first master trust to attain the NAPF’s new PQM Ready Standard. The benchmark shows employers that NOW: Pensions is a well governed pension scheme with low charges and good member communications.

In January 2015, NOW: Pensions achieved independent assurance of scheme quality in accordance with the new master trust assurance framework (AAF02/07) introduced by The Pensions Regulator (TPR) in conjunction with the Institute of Chartered Accountants in England and Wales (ICAEW).

The NOW: Pension Trustee Directors, whose role is to safeguard the interests of members, comprises well-known industry figures with different areas of expertise:

  • Jocelyn Blackwell, founding partner Dunnett Shaw
  • Christopher Daykin, former Government Actuary
  • John Monks, member of House of Lords and former General Secretary of ETUC and TUC
  • Win Robbins, former Head of European Fixed Income at Barclays Global Investors
  • Nigel Waterson, former Shadow Pensions Minister

Employee charges are just £1.50 per month administration charge (reduced administration charge of £0.30 – £1.00 to be applied during auto enrolment phasing for lower earners) plus a 0.3% annual product investment management charge, with no hidden charge

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NOW: Pensions has a good technical infrastructure combined with a pension product suitable for our team. We couldn’t be happier with NOW: Pensions.
Martin Woods, SALT.agency