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02 April 2015

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NEST awards single year gilt mandate to LGIM

NEST (National Employment Savings Trust) has awarded its single year maturity gilt fund mandate to Legal & General Investment Management (LGIM). This adds to the existing ‘building block’ funds the scheme uses to create its default range of 47 NEST Retirement Date Funds.

The gilt funds will be used in the foundation phase (for younger members) and in the consolidation (de-risking) phase of the scheme.
LGIM will provide a rolling replacement of the fund that matures each year so there will always be ten funds available. For example, when the 2016 fund matures a new 2026 fund will be created.

Mark Fawcett, NEST Chief Investment Officer, said:
‘This procurement represents the latest step in NEST’s continued commitment to refining the way we deliver our investment objectives for members.  LGIM’s funds will be important new elements of how we deliver our risk management approach. The aim is to provide improved returns relative to cash for members both as they build up their pot and at the stage when they’re preparing to take their money out.

‘Our selection of LGIM reflects their technical expertise and the value for money their funds represent for our members.’

Sarah Aitken, Head of Distribution, EMEA, Institutional Business at LGIM, said:
‘Since its creation in 2012, NEST has become a key partner for Legal & General Investment Management. This new range of UK gilt funds is specifically designed to provide some additional yield over cash whilst maintaining capital protection during both the foundation and de-risking phases of NEST’s investment strategy. We are delighted that this appointment further extends our relationship with NEST.’


Explaining the use of single year gilt funds
NEST Retirement Date Funds in the foundation phase gradually switch into the Growth phase, where more of the fund is invested in risk-seeking assets. NEST will match the maturity of gilt holdings to the switching dates, so each NEST Retirement Date Fund in the foundation phase may hold a selection of the single year gilt funds.

For NEST Retirement Date Funds in the consolidation phase, the objective is to invest in gilts that match the maturity of the fund. This will mean, for example, that the 2017 NEST Retirement Date Fund will invest in the 2017 gilt fund, the 2018 NEST Retirement Date Fund will invest in the 2018 gilt fund.

Key facts about NEST:

  • The workplace pension reforms mean most employers will have to automatically enrol workers into a workplace pension scheme that meets or exceeds certain standards. They’ll also need to make a minimum contribution for many of these workers.
  • NEST, set up as part of the reforms, is a national defined contribution workplace pension scheme available to all employers to use to meet their new duties.
  • NEST has a public service obligation to accept any employer (whatever their size) who wants to use the scheme to meet their duties.
  • NEST is designed around the needs of people who are largely new to pension saving, with clear communications, low charges and easy online tools and services. It is run as a trust-based scheme and the Trustee has a legal duty to act in its members’ interests.

Legal & General Investment Management (LGIM) is one of Europe’s largest institutional asset managers and a major global investor.  LGIM manages £499 billion in assets for more than 3,000 clients*.  Throughout the past 40 years we have built our business through understanding what matters most to our clients and transforming this insight into valuable, accessible investment products and solutions.  We provide investment expertise across a full spectrum of asset classes including equities, fixed income, commercial property and cash.  Our capabilities range from index-tracking and active strategies to liquidity management and liability-based risk management solutions.

*As at 31 December 2014