How NEST Retirement Date Funds Work?

When a worker joins NEST, their money will be invested in a NEST Retirement Date Fund based on their State Pension age. After this, they can change their NEST retirement date if they want to, and their retirement pot will be moved to a new NEST Retirement Date Fund free of charge

We provide a NEST Retirement Date Fund for every year that we think members are likely to take their money out. For example, if a member plans to take their money out in 2055 we’ll invest their retirement pot in the NEST 2055 Retirement Fund.

Three stages of saving

Saving consistently gives members the best chance of getting a good retirement income when they take their money out.

Our three-stage investment approach has been created to encourage people to keep saving. 

• Foundation phase - The first stage aims to help members develop a pension savings habit and establish their retirement pot.

  We aim to avoid sharp falls in value. We think that a steadily growing balance will encourage members to save for their future. We believe this is important at a time when the main priority should be to get into the savings habit.

  After all charges have been taken into account we still expect to grow a member’s pot by at least the cost of living.

• Growth phase - This is the longest phase and lasts up to 30 years. It focuses on growing a member's retirement pot more quickly. During this period our objective is to grow the member's retirement pot by at least 3 per cent more than inflation once all charges have been covered.

  There's more chance that members will see short-term ups and downs in the value of their pot than in the Foundation phase. We think that this is the right time for them to take more risk while they are still some years away from retirement. However we still aim to protect their money from big shocks.

• Consolidation phase - The final stage aims to get the retirement pot ready for the member to take their money out of NEST. We gradually move the member’s money into investments that suit the mix of cash and retirement income that they're likely to take.

  We still expect the pot to grow more than the cost of living while protecting it from big falls in value close to retirement.

More choice, more control

NEST provides a range of alternative funds that cater for the needs of a diverse workforce. Members can freely change the fund their money is invested in if they want to. There are no additional charges for investing in any of these funds or for switching between them.

Members can also change the date they plan to take their money out of NEST. They can choose any date from their 55th birthday but before they reach the age of 75.

Members can make these choices online or by calling us. You don’t have to do anything else.

Easy to understand

NEST uses plain language and simple explanations to help members understand what happens to their money and how the scheme works.

This in turn helps employers. The workers you’ve enrolled won’t need to come to you for help. They can find all the information they need about NEST on our website and in their member welcome pack.

Listening to employers and members

We have an Employer Panel and a Member Panel who report to the Trustee. Their ideas help us make sure that the investment approach and the fund range are always suitable for our members. Both Panels are also involved in the annual review of our Statement of Investment Principles.

We also keep up with the opinions of workers, employers and intermediaries through our ongoing programme of research. This helps make sure that NEST continues to address the investment needs of as many people as possible.

In addition to this, our Investment Team talks to leading pension providers, fund managers and academics to keep in touch with all of the latest approaches to investment management.

Read our case studies to find out how NEST helps members save.