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.