Nest chair responds to concerns over expansion plans

Otto Thoreson

Nest chair Otto Thoresen responds to concerns over the Government’s proposals for expanding Nest.

Other providers are saying this is an example of mission creep, is this fair?

No. Nest was set up in a world where most of our members were compelled to annuitize and we had a retirement journey in place which reflected that. We provided a structured journey to help members choose an appropriate annuity and a panel of providers in place. However, the options at retirement have now changed.

People have more flexibility and we believe there’s a clear role for Trustees in providing support to help people access their pots in more flexible ways, and also to support them in getting good outcomes.

For the DC generation, their pension savings are going to have to work a lot harder. These are the people for whom a mistake, or a poor investment could be catastrophic. I want to be confident enough to look my other Trustees in the eye and know that we’ve done everything in our power to ensure that our members can achieve a good outcome and feel confident in their decision.

Help and support are also important but what’s also key is to make available solutions which they can make sense of and that they can choose with confidence. For me, that means we need retirement journeys that directly respond to our members’ needs, which are simple for them to use and provide good value.

And we also have to be alive to the fact that for many people with smaller pots, accessing on-going financial advice just won’t be affordable.

The consultation was launched on the same day it was revealed Nest’s loan has increased dramatically – is the potential move into drawdown simply a strategy to pay back the loan more quickly?

No. This is about what we believe is our role and that’s supporting our members to achieve good outcomes from their pension savings.’

Is Nest under pressure from Government to have a plan in place to pay it back?

No. This is about what we believe is our role and that’s supporting our members to achieve good outcomes from their pension savings.’

Is there enough evidence of market failure for a move into drawdown to be justified?

For me, this is about governance – which is about independent oversight and support within a trust-based framework – or rather a lack of it. Current products on the market usually leave key decisions to investors like how much income they’ll draw down and where their pot will be invested.

Most investors in these products need to take advice – not only as a one-off about what product to choose, but on-going advice to help them manage their income throughout retirement. Our members will have comparatively small pots and all the indications are that they won’t take, or won’t be able to afford, independent advice.

The journey we want for our members is one where they can take advice if they want to, but if they don’t, or can’t, they can be confident that, with the oversight of independent trustees who are acting in their interests, they’ll still get good outcomes.