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State Street Corp to administer Nest funds

State Street Corporation is to run Nest’s fund administration service.

Nest plans to advertise for fund managers later this week to run Nest’s different investment mandates.

Nest chief executive Tim Jones says: “It was a strong competition, and we are now well placed to deliver a first-rate service at low cost to members.”

State Street has £12.8tn under custody and administration and over £1tr is assets under management.

The 10 year contract is in two stages with the first having started on October 25 and ending in late November to align it with the decision on whether to continue using Tata to administer Nest. Nest Corporation says it is confident that the Tata is the right supplier with Nest’s trustees and the Government to make the final decision later this month.

The adverts for fund managers for the national pension scheme will seek managers in global equities (developed) funds, UK fixed interest funds, Index linked fixed interest funds, cash funds and diversified beta funds.

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. Tata and State Street – good old home grown companies helping to ease the UK balance sheet.

  2. So there are no UK copmanies able to run this scheme…..not even an existing Life Assurance company with robust pensions systems in place!!!Will we also be sending all this “secure” data overseas I wonder.
    As there was strong competition I can’t imagine there will be unforseen cost rises in the future that were not in the original “low cost to members” or am I just getting cynical.

  3. I cannot help wondering who will apply for those ‘fund manager’ roles? The ‘fat’ available for recruiting and retaining top notch fund managers must be restricted. Equally would a top notch fund manager be enticed away from their current positions by the thought of running these funds. Will it be a balloon on their CV’s or a brick. Time will tell……yawn……..

  4. From what I’ve read elsewhere, nearly all the funds are going to be passive, so there won’t be much management involved.

    Then again, it wouId be interesting to know just who the other contenders were in this “strong competition”. Just how many other outfits are likely to have been competing strongly for a contract like this?

    What will State Street’s AMC be? What will be the AMC of each fund once they’ve actually got some managers on board?

    And, given that a lot of small employers don’t want the expense of NEST foisted on them in the first place, just how many of them are going to be willing to shell out on top for an adviser to provide guidance on which fund/s each member should choose?.

    Then again, as pointed out by one of my colleagues on another site, most NEST pots will end up being so small that they’ll be commuted on the grounds of triviality ~ so what will NEST really have achieved other than the expenditure of a lot of time and money when what the government a SHOULD really be doing is making retirement saving so attractive that auto-enrolment wouldn’t be necessary.

    Carrot is better than stick………it’s as true now as it was millenia ago.

  5. Oh yes ~ in the current economic climate, NEST’s return on its cash fund, offset by an AMC which isn’t going to be much less than 3% will be interesting to observe.

    Participants will end up owing NEST money!

  6. Triviality achieves a nice clawback for the govt as the funds are taxed at Emergency Rate. Last time I calculated this, the effective rate was about 34%!

  7. “So there are no UK copmanies able to run this scheme”

    There were plenty but none of them wanted to. They saw it for what it is – a white elephant.

  8. To an earlier point, State Street will not be managing any of these portfolios – only administering and valuing. No AMC applies.

    Also, if one desires to know more about the competition, one is entitled under the freedom of information act. Have a look….even at the individual bids!!

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