NEST seeks to boost returns with new single year gilt funds

NEST (National Employment Savings Trust) is planning to procure single year maturity gilt funds to add to the existing ‘building block’ funds the scheme uses to create its default NEST Retirement Date Funds, it announced today.

NEST is seeking ten single year maturity gilt funds which it will replace on a rolling basis - for example when the 2016 gilts mature, a 2026 maturity gilt fund will be added.  

The gilt funds will be used in the foundation phase (for younger members) and in the consolidation (de-risking) phase of the scheme to provide improved returns relative to cash for members both at the beginning and towards the end of their time saving with NEST.

Mark Fawcett, NEST Chief Investment Officer, said:
‘NEST is committed to continually refining our investment offering to members as we grow.  Single year maturity gilt funds will have a role in both the foundation and de-risking phases of our three-staged investment strategy, allowing us to refine how we deliver our risk management approach for members both as they build up their pot and at the stage when they’re preparing to take their money out.

‘This procurement comes at an exciting time in the evolution of NEST as we seek to secure better retirement solutions for our members in the changing pensions landscape.’

The tender process will run until 9 January 2015 with a view to awarding the contract by Spring 2015.

NEST’s investment approach - key features:

1. unique default option comprising of 47 single-year target date funds, risk managed for each year of retirement
2. focused fund range including Ethical, Sharia, Lower Growth and Higher Risk options with the same low charge as the default
3. sophisticated risk management driven by innovative investment techniques, high quality analysis and transparent governance  
4. cost-efficient delivery of bespoke solutions powered by leading global fund managers
5. clear investment communications designed with and for members, employers and their advisers.

Find out more on our website

Key facts about NEST:

• The government is currently introducing reforms that mean employers will have to automatically enrol most of their 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, which was established by government as part of these reforms, is a national defined contribution workplace pension scheme available to all employers to use to meet their new duties. It 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 a trust-based scheme, run on a not-for-profit basis and the trustee has a legal duty to act in its members’ interests.
• NEST has a public service obligation to accept any employer (whatever their size) who wants to use the scheme to meet their duties, as a sole scheme or alongside other provision.