We use cookies to improve your online experience. By continuing to browse this website you're agreeing to our cookie policy. Find out more about cookies and how we use them.

NEST Retirement Date Funds

Different funds for different retirement years

NEST Retirement Date Funds are the default option for savers who are automatically enrolled with NEST.

Funds to suit different workforces

When a worker enrols with NEST, their money will be invested in a NEST Retirement Date Fund based on the year they’re expected to retire. For example, if this is 2055 we’ll invest the member’s retirement pot in the NEST 2055 Retirement Fund.

NEST Retirement Date Funds are what’s known as single-year target date funds and are unique in the UK.

NEST Retirement Date Fund example years image

You can see where NEST’s funds are invested and how they are performing by reading our fund factsheets.

Investing carefully for every member

NEST aims to maximise members’ pots by taking the right investment risk on their behalf at different periods throughout their time saving.

What’s right when they first start working and saving won’t be the same as what’s appropriate as they get closer to retirement.

Members and their employers have the reassurance that NEST Retirement Date Funds invest in different ways over the three phases of saving members may go through.

We always spread the money of members invested in NEST Retirement Date Funds over a broad range of global investments. These include shares, bonds and property. Exactly where members money will be invested depends on how far members are from their retirement. This is because we’re trying to achieve different objectives in each of the three phases.

investment approach glide path image

The foundation phase is for people who join NEST when they’re still many years away from retirement. The aim is to help younger members develop the pension saving habit and establish their retirement pot. We help do this by investing in ways that aims to avoid sharp falls in their pot value and steadily grow their pot.

In this phase we aim to:

  • keep pace with the cost of living
  • significantly reduce the likelihood of extreme investment shocks
  • take appropriate risk at appropriate times, taking account of current economic and market conditions
  • target a long-term volatility average of 7 per cent per annum

This phase focuses on growing a member’s retirement pot much more quickly. The aim is to do this by at least 3 per cent more than inflation after charges. There’s more chance of short-term ups and downs, but it’s the right time to take more risks while members are still some years from retirement. We still aim to protect their money from big market shocks.

In this phase we aim to:

  • investing in more growth-seeking assets
  • target investment returns greater than inflation plus 3 per cent and cover all scheme charges
  • aim for steady growth in real terms over the life of the fund by being well-diversified
  • target a long-term volatility average of 10-12 per cent per annum

The final phase aims to get the retirement pot ready for the member to take their money out. This phase typically begins 10 years before a NEST Retirement Date Fund is due to mature. At this point we’ll start gradually moving the pot out of higher risk assets to help protect it from the possibility of big falls in value close to retirement. Although there’s a chance members could miss out on big rises in the value of some types of investment, they’re less likely to lose the money they’ve built up.

In this phase we aim to:

  • continue to grow the portfolio in real terms
  • gradually reduce volatility as the fund gets closer to maturity

Find out more about how the NEST Retirement Date Funds invest for members in Looking after members’ money (PDF).

NEST Starter Fund

If members join before aged 22 when they become eligible to be automatically enrolled, then they’ll be invested in the NEST Starter Fund. This is invested in similar way to funds in the foundation phase of the NEST Retirement Date Funds.

NEST Post-retirement Fund

If members don’t take their money out of NEST when we’re expecting them to, or if they join NEST after their State Pension age, unless they tell us differently we’ll make an assumption that their retirement age will be 75. We’ll put the member’s money in our Post-retirement Fund. This may not be the best place for their money if they plan to keep their money in NEST for a number of years. If they let us know when they want to take their money out, we can invest their pot in the NEST Retirement Date Fund for that year.

If a member plans to retire before or after their expected retirement year, it’s important they let us know, so we can make sure we’re investing members’ money in the right fund. Changing NEST Retirement Date Funds is free and simple to do.

Members can change their retirement year by logging into their online account.

Why we use a target date approach

NEST’s target date fund approach allows us to carefully manage money in different ways depending both on the members’ age and the economic and market outlook. Using a target date fund approach to provide our member funds also helps us keep down the costs of investing. These can eat away at savers’ pots when they save in a pension scheme.

Target date funds are also easy to communicate to members. They allow a scheme like NEST to respond quickly, adapting to changes by reviewing our investment strategy within the target date fund approach.

For example, in light of the new pension freedoms introduced in April 2015, NEST has been able to adapt the way it invests members’ money to better reflect the new regulations.

You can find out more about how the target date fund structure has helped NEST respond to the new pension freedoms by reading this article aimed at professional advisers (opens in a new window).

Find out more about the broader range of benefits target date funds offer our members in this article (opens in a new window), aimed at professional advisers.

Find out what drives our approach

Discover the principles behind what we want to achieve for members and how we achieve it.

Read more here

Start using NEST now

To access NEST’s high quality investment management, you can sign up to and start using NEST now.

Start using NEST now