NEST Corporation and NEST Scheme annual reports and accounts 2012/13

NEST Corporation has published its annual report and accounts for 2012/13 today, along with the annual report and accounts 2012/13 for the NEST pension scheme.

The NEST Scheme accounts highlight the exponential increases in volumes the scheme is handling and the progress it has made, both in the run up to automatic enrolment being implemented and in the six months of the new workplace pension duties being in place.

The NEST Corporation accounts highlight the Corporation has successfully delivered the early stages of automatic enrolment, bringing on board some of the largest employers in the UK. It also notes an incidence of fraud against the Corporation involving the diversion of payments to a supplier, and what the Corporation has done to strengthen its defences. The fraud resulted in a loss of £1.4m from NEST Corporation. No money was taken from the NEST Scheme or members’ pots.

A summary of the key points from both reports is below.

Lawrence Churchill, chair, NEST Corporation, said: ‘This has been a significant year for NEST, with membership of 81,000 at the end of the financial year in March, already growing to over a quarter of a million today.  Our systems have coped very well with this step-up in scale.

‘We had one setback when we discovered a fraud against NEST Corporation, and immediately strengthened our controls. This was a timely reminder of the need for continuous vigilance in the modern world.

‘Our strategy for investing members’ contributions was also very successful this year, with all of the funds performing as expected and in some cases significantly exceeding the benchmarks. While it is longer term performance that matters, we have got off to a great start.

‘There is compelling evidence that NEST's proposition as a straightforward, low charge scheme with a purpose built investment approach, combined with our ability to cope with scale, is resonating well with British companies and their workers.’

Tim Jones, chief executive, NEST Corporation, said: ‘I am proud of what we’ve achieved this year – we have faced significant challenges and hurdles but have delivered for members and employers. We won’t always get everything completely right, but we continue to learn and evolve our services to ensure they meet the needs of employers and members.

‘I am confident that we have the systems in place to rise to the volume challenges we face in the coming months, whilst still delivering excellent service to members and employers alike.

‘The fraud loss NEST Corporation incurred represented a serious failure in our system of internal controls. We have taken rigorous and immediate action to strengthen our control environment.

‘Our staff are dedicated and passionate about what they are here to do – which is ensure NEST delivers a quality, low charge scheme for millions of members. The progress we have made so far – for example in areas such as communications and investment - is testament to that.’

Highlights from the NEST Scheme annual report and accounts 2012/13:

As at the end of March 2013:

• NEST had 81,255 members, including 135 members who are self-employed
• NEST had £3.8m of assets invested with investment managers
• NEST was working with 347 employers

Current NEST membership

As at the end of June 2013:

• 275,000 members
• Assets Under Management had tripled to around £11m
• Working with over 900 employers
        - 450 On its volunteer programme
        - 480 In the first stages of automatic enrolment

Performance of NEST funds 2012/13

*The overarching investment objective of the NEST Retirement Date Funds is to target investment returns in excess of inflation after all charges over the long term. The chosen measure of inflation is the Consumer Price Index (CPI). NEST Retirement Date Funds in the Foundation phase target investment returns equivalent to CPI and cover all scheme charges. NEST Retirement Date Funds in the Growth phase target investment returns equivalent to CPI plus 3 per cent and cover all scheme charges.

Highlights from the NEST Corporation annual report and accounts 2012/13

NEST Corporation:

• delivered the infrastructure and processes to enable NEST Corporation employers to use from the onset of employer duties (OED).
• was the subject of a fraud involving the diversion of payments to a supplier, resulting in a loss of £1.4m. NEST Corporation acted immediately to strengthen its defences. The fraud was directed at NEST Corporation. No money was taken from members’ pots.  
• agreed a Corporate Responsibility Framework, drawing on the Sustainability Reporting Framework developed by the Global Reporting Initiative.
• responded to a number of consultations.
• confirmed how the NEST scheme complies with the Pensions Regulator’s six principles for good workplace defined contribution schemes.