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10 July 2017

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NEST Corporation publishes its annual reports and accounts 2016/17 and third master trust assurance report

NEST Corporation today (10 July) published its annual report and accounts for 2016/17, along with the annual report and accounts 2016/17 for the NEST pension scheme.

NEST Corporation Chair, Otto Thoresen said:

‘This year has been the busiest to date for NEST, with more than 240,000 new employers and 1.5 million new members joining the scheme. Our volumes point towards the success of the government’s auto enrolment policy so far, with more people saving into a pension now than ever before; and NEST doing the job it was set up to do.

‘Over the past 12 months, the Trustee has been focused on ensuring NEST is a robust and established scheme for both our employers and members. We believe it’s important that we do all we can to build and safeguard confidence in pensions for the new generation of savers that auto enrolment has created. As part of this, NEST has completed its third AAF 02/07 report under the Master Trust assurance framework, developed by The Institute of Chartered Accountants in England and Wales (ICAEW) and The Pensions Regulator (TPR).

‘Looking ahead, we believe we are well prepared for the new Pensions Schemes Act, which is designed to bring more rigour to the master trust market as a whole.’

NEST Corporation chief executive, Helen Dean, added:

‘I have a real sense of pride in what NEST Corporation has achieved in this past year. In particular, I am delighted that we have continued to meet our public service obligation even with the unprecedented rise in employers knocking on NEST’s door. We regularly see volumes of a thousand employers signing up with NEST in a single day.

‘We have welcomed more than 240,000 new employers in this financial year, many of whom had no previous experience of workplace pensions. We supported them by making the NEST system intuitive and straightforward to use. The success of our approach has seen over 80 per cent of employers managing to set up their account without needing any additional help from us.

‘We also saw our assets under management rise to nearly £1.7 billion and our investment performance over the last year shows that we are consistently delivering double digit returns for our members, while managing their exposure to risk and market volatility.

‘Those factors evidence the great work we have done to date to support employers and members, and put us in a strong position as we move forward.’

Highlights include:

  • During the year, NEST received a Defaqto 5-star rating as an auto enrolment provider and won eight industry awards.
  • NEST reached its five year investing anniversary in July 2016 and has reported that long term returns for members are comfortably on track – annualised five year performance in the growth phase of the NEST Retirement Date Funds was 11.3 per cent, compared to a benchmark of 4.5 per cent.
  • NEST further diversified its investments by investing in a new climate aware fund developed in partnership with UBS, the UBS Climate Aware World Equity Fund, and began the procurement process for a high yield bond fund.
  • NEST published its first responsible investment report, Working for change, in August 2016 which reported to members and stakeholders how NEST is taking an active and responsible role as a steward of assets on behalf of its membership.
  • The restrictions on transfers in and out of the scheme were lifted from 1 April 2017, as was the NEST annual contribution limit.
  • NEST Corporation signed up to the Women in Finance Charter and has set itself the target that by autumn 2019 at least 30 per cent of its executive and director roles will be held by women.
  • In April 2017 the Department for Work and Pensions (DWP) reported that, based on current assumptions, the loan made to NEST Corporation to establish and operate the scheme would be repaid by 2038, with a breakeven point in 2026. This projection shows we’re on track to become self-financing within the original range forecasted by government.
  • During the year the DWP moved to allow employers to contractually enrol workers into NEST, following a call for evidence on NEST: evolving for the future. NEST welcomed this change, which removes a source of confusion and administrative burden for employers already using NEST.  

Following an independent assessment by KPMG, the scheme has also today published its third master trust assurance report revealing a clean bill of health. The reporting accountant confirmed that the NEST scheme’s internal controls have met the quality standards set by The Pensions Regulator (TPR) and have operated effectively over the period of the report.

NEST scheme key stats:
As at the end of March 2017:

  • NEST membership had grown by 1.5 million members to around 4.5 million members (2015/16: over 2.9 million).
  • The average opt out rate was 8 per cent on average, and lower for younger members.
  • NEST was working with over 327,000 employers (2015/16: over 85,000).
  • NEST had over £1.6 billion in assets under management (2015/16: nearly £825 million).
  • NEST currently sees over 1000 employers signing up to the scheme every working day.

As at Sunday 2 July:

  • We have over 5 million members.
    Members numbers include those that may have stopped contributing for some reason, for example they may have changed jobs and been enrolled into a different scheme; or are taking a contribution break. Member numbers exclude people who’ve opted out or left the scheme but include members still in their opt-out period.
  • Our opt-out rate is 8 per cent on average, and lower for younger members.
  • There are over  398,000 employers signed up to NEST, plus over 3,700 self-employed members.
    Employer numbers include employers that have set up their account with us but may not have enrolled any workers yet, for example some have set themselves up ahead of their staging, or are using their waiting period.
  • There are over 16,500 NEST Connectors helping employers use NEST.
    NEST Connector numbers refer to the number of unique organisations that have set up to be a NEST Connector.
  • We’re looking after over £1.8 billion on behalf of our members.

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 to use online tools and services. It’s run as a trust-based scheme in the interest of its members.