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Nest auto-enrolment preparation hit by high staff turnover

Tim Jones Nest

Nest’s preparation for automatic enrolment has been hit by higher than average levels of staff turnover.

The Government-backed pension scheme’s staff turnover has been 17 per cent during 2011/12, compared with an industry average of around 15 per cent.

Nest says it has struggled to retain staff this year partly as a result of a two year wage freeze imposed by the Government.

Nest chairman Lawrence Churchill says: “It has been a tough year, with staff turnover above both industry and the trustee’s risk appetite.

“We are looking at ways of tackling this, including consulting with DWP on how this can be addressed for the future.”

Chief executive Tim Jones (pictured) says: “As a public body, we have been through a two-year pay freeze which has impacted our ability to retain some people, but despite the challenges we are finishing the year on time and on budget, due to the determination and commitment of our people.”

People, property and CSR director Clare Smithson says: “The majority of our staff are now on permanent contracts and we have established London as our future medium term location to provide stability. Nest is also establishing a people, infrastructure and engagement programme.

“This is designed to retain and motivate staff within a framework that is appropriate to a public sector organisation and subject to clear oversight from the remuneration committee.

“Nest is also talking to DWP about how Nest can better link reward to performance, in line with guidelines for public sector organisations.”

Nest’s annual accounts for 2011/12, published today, reveal the scheme received a £51m loan from the Department for Work and Pensions last year.

This is on top of the £79m loan Nest drew down in 2010/11 and the £35m it received in in 2009/10. The scheme has received £171m in Government loans in total.

The loans will be paid back through a 1.8 per cent contribution charge. Nest members will also have to pay a 0.3 per cent annual management charge.

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. Is this or is this not a Dead Duck scheme sitting on the NEST?
    1. Here we have Ed Milligoon ranting about charges and NEST has a 2.1% AMC. I thought Stakeholder had a 1% charge? Other commercial entities can undercut this cost – so why isn’t anyone shouting? There is no firm undertaking as to when this charge will reduce, or how long it will take them to pay back the £284 million and rising.
    2. I understood that TATA was the ultimate ‘owner’ of NEST, so how come the whole works hasn’t been outsourced to Mumbai. Now that really WILL be a treat for plan holders!
    3. Indeed there was no one else bidding – so in effect they have a monopoly. What has the OFT to say about that?
    Overall there seems to be a conspiracy of silence and if not misinformation, then let us say economy with la Vérité.
    Why are they bothering – it is beginning to look as well organised as the Olympics!

  2. Correction Harry ~ NEST will have a 1.8% initial charge and a 0.3% AMC.

    That aside, like so many, many schemes before it, the government decided it could do a better job than the private sector but has in fact ended up spending on NEST vastly more than what the private sector would have done. For starters, most of the infrastructure for auto-enrolment retirement savings schemes is already in place in the private sector. Why start from scratch with another?

    I mean ~ how the hell d’you spend £170m on something that could, in theory, actually be reasonably uncomplicated (but which, because government tossers had a hand in it, manifestly isn’t) just getting it ready for launch?

    How many people does the NEST employ anyway? What’s the total wage bill? What the hell do they all do all day? The ICO is in Wilmslow, Cheshire ~ why does the NEST need to be based in London when a provincial location would be far less expensive? The same, of course, goes for the FSA and the FSCS. Well, never mind, it’s all just OPM isn’t it?

    It’s a bit like the government’s proposals to deal with the costs of LTC. Given a choice between a £1.7Bn public sector solution and allowing, say, £20m annual tax relief on LTC insurance plans (assuming AP’s of £100m), on what basis did the government ever think that the £1.7Bn solution is the best one to try first?

    These idiots need their heads knocked together!

  3. PensionsManager 19th July 2012 at 11:56 pm

    AMC 2.1%? Not quite since the 1.8% contribution charge is a one-off charge. It’s all in AMC is 0.3%, but I agree NEST is a bit of a dead duck. It can’t compete on equal terms due to restrictions on transfers etc. and has spent a fortune. But it is run by an ex-banker so what do you expect?

  4. So where has all this money gone then?

  5. @Pensions Manager, you are right to highlight that the charges aren’t 2.1%. The effective contribution amcs range from circa 0.4% to 3.9% over 20 years, so the attempt by NEST to say “it’s 0.5%” is a gross misrepresentation and any other organisation which tried this would get pilloried for a lack of transparency

  6. Matt Worthington 20th July 2012 at 9:54 am

    Actually, the NEST customer service/call centre/administration has been outsourced to Diligenta (a subsidiary of Tata), and this is run from Peterborough.

  7. Can’t help wondering how long it will be before NEST joins the ranks of those other “walking dead” funds.

    Sadly though, unlike the zombies, you won’t be able to take your money elsewhere once you reach the point that you can’t stand it any more….

  8. “….Nest is also establishing a people, infrastructure and engagement programme.

    …….can better link reward to performance, in line with guidelines for public sector organisations.

    …..designed to retain and motivate staff within a framework that is appropriate to a public sector organisation”

    Doesn’t these statements point to the creation of yet another overpaid bunch of tax payer funded quangocrats, with gold-plated pensions, bonuses and jobs for life ! I am ******* fed up of paying my taxes, paying regulatory fees and then having to help fund the fat salaries and pensions of people whose ultimate aim is to destroy my livelihood !!!

    It would be forgivable if NEST had any prospect of success – but it doesn’t !!!

  9. So come on guys, is what you are all saying that NEST is no good for anyone?

    Suely after 6 years in the planning, a long tendering process and all the due dillegence that has been done to make sure the UK has a fit for purpose retirement scheme, it must be fab.

    My god, IFA’s are sooooooooooooooo sceptical aren’t you? I wonder why?

    mmmmmmmmmmmmmmm I will go and have a lye down and long think.

  10. Ok Alan Jarvis
    You take a NEST Pension with its rally naff fund choices, unproven manager, no advice and higher than average charges – whichever way you wish to cut it. To give you an analogy: An East German Trabant might (and I stress might) get you to your destination, but I would prefer to spend a little more and get there in a little style with (say) a BMW.
    Run by an Indian company with real no interest or incentive other than pile it high sell it cheap and walk away whistling. If it’s going to be a government subsidised scheme – why not just put the money into the State Scheme instead. Will the Government really get its loans back? At what rate of interest?
    If you think there are ulterior motives that’s entirely your prerogative, but you don’t have to be biased to see and recognise nonsense.

  11. Julian Stevens 24th July 2012 at 5:23 pm

    Really Harry ~ you haven’t done your homework at all on this subject, have you? Take a look at http://www.nestpensions.org.uk/schemeweb/NestWeb/public/aboutUs/contents/fund-manager.html and you’ll see the appointed fund managers are:-

    Passive Global Equities – UBS Global Asset Management Life Ltd

    Passive UK Gilt – State Street Global Advisors

    Passive UK Index Linked Gilts – State Street Global Advisors

    Sterling Cash – BlackRock

    Diversified Beta – BlackRock

    State Street Global Advisors may not be a name readily familiar to the average GP IFA, but it’s no nickel & dime outfit, as you’ll see from http://www.statestreet.com/uk/en/.

    Unproven managers? I hardly think so, and the choice of mainly passive funds is no accident.

    Advice, as in any other area of financial planning, will have to be paid for, in the case of NEST separately from and in addition to the charges inherent in the scheme itself.

    I’m no fan of NEST as an alternative to a good and almost certainly vastly more cost-effective private sector scheme, but if you’re going to take pot-shots at it, a grasp of the facts would probably be useful.

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