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NEST seeks innovative ways of accessing private credit

Published: 04 September 2018

NEST has today issued an Invitation To Tender for fund managers to support the evolution of its investment strategy

Private credit has historically been considered too expensive and illiquid for defined contribution (DC) pensions. But following extensive research and analysis NEST has established that, with some innovation, its members should be able to benefit from the higher returns available. It is challenging the industry to come up with appropriate solutions and deliver them at an affordable price for the new ‘DC generation’. 

The traditional model of small closed-ended funds unlikely to meet NEST’s needs. The scheme is seeking managers that can operate evergreen, scalable funds focusing on unlisted infrastructure debt, real estate debt and corporate loans. NEST is welcoming innovative ideas about how to access these markets either independently or in a multi-asset solution. 

Looking ahead, NEST will have enough assets under management to explore direct and co-investment opportunities. It is interested in working with managers with the experience and motivation to support NEST in developing its in-house expertise in this area. 

Commenting, NEST chief investment officer Mark Fawcett said:

‘Developed market equities bonds are looking fairly fully valued. With volatility on the rise, we must find cost-effective ways to access alternative sources of return and diversify risk for our members. 

‘We see long term potential in private markets and alternative asset classes. We’ve recently added commodities and are now looking to add private credit to our toolbox. We don’t buy the argument that private credit is out of reach for DC schemes. Our members should have access to the same opportunities as pension savers in large, sophisticated DB schemes. 

‘DC pension savings are soon going to dominate the market and fund managers are beginning to recognise this. They'll need to think creatively about what this new generation of savers requires and be willing to negotiate seriously on fees. 

‘We’re looking to work with innovative fund managers who see the future potential in this market and want constructive, long term relationships with their clients based on pension savers’ best interests.’

To respond to this request for proposals, fund managers can download the invitation to tender at: 

https://nesttenders.bravosolution.co.uk/web/login.shtml

For more information, please contact: 

Annie Bruzzone: +4420 3056 3657; annie.bruzzone@nestcorporation.org.uk

Information 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.