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Royal London wants Nest trustees to probe investment strategy

Royal London is urging the trustees of the national employment savings trust to scrutinise the scheme’s “questionable” investment approach.

Nest, which is due to launch in low volumes next year, unveiled a cautious investment strategy earlier this month, with the early stages of membership exposed to lower risk than the “growth” phase in the middle of people’s careers.

In an interview with Money Marketing last week, chief investment officer Mark Fawcett said the decision had been taken to avoid high volumes of opt-outs and to build public confidence in the scheme.

Royal London head of group communications Alasdair Buchanan (pictured) says Nest’s approach to risk-profiling, where individuals are issued “target date funds” which become progressively more conservative as retirement nears, should be questioned by the trustee board. He also challenges Nest’s “standardised” risk-profiling approach, saying it is unlikely to be suitable for many people.

Buchanan says: “The likelihood of saving patterns matching a standardised risk profile is very low. In fact, the whole investment approach is questionable and I would expect the trustees to challenge whether it is the right thing to do.”

AWD Chase de Vere head of communications Patrick Connolly believes that Nest is in “a no-win situation”. He says: “We do not disagree with the app-roach that has been taken, although in an ideal world you would have more investment options and they would be more flexible to suit individual needs.”

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