What value Nest for auto-enrolment SME clients?
From next year the government’s auto-enrolment programme will be tested on companies with fewer than 500 employees and Nest was keen to remind advisers of its capabilities and the opportunities at hand to guide the nation out of a pension deficit.
John Taylor, managing director of customer and proposition for Nest, led the seminars and began by reminding delegates that 90 per cent of employers had informed the government-funded scheme that they would require some form of help. In accordance with many of his peers, Mr Taylor described next year as a decisive period for firms without human resources departments and the financial muscle to manage auto-enrolment alone.
After quoting some figures on the thousands of employers set to auto-enrol in the next few years – 27,400 in 2014, 44,500 in 2015, 447,050 in 2016 and up to 845,250 in 2017 – he turned to the numerous financial advisers in attendance and emphasised the important role that intermediaries have to play. Mr Taylor was keen to stress how pivotal it was for advisers and Nest to work side by side and also used the occasion to brush off speculation that the scheme was merely a “last resort”.
He said: “We are a trust-based pension scheme. We have a board of trustees that ensures pensions are delivered in our members’ best interest and, as such, we should not be considered as just a last resort. We are trying to reinvent pensions for our members and are delivering what we believe is a high-quality pensions offering. We’ve had a number of investment awards from the industry… so this is a very strong proposition that you can recommend to your clients.”
As part of its strategy to convince advisers that it can compete with the large and established providers, Paul Todd, head of investment policy for Nest, was called to the stage to assure delegates that the scheme’s investment propositions were well researched and effective.
Quality
Mr Todd – who repeated the phrase: “It is possible to have high quality at low cost” – discussed the 47 individual funds programmed for every year of retirement and how they each came with different return objectives and asset exposure. He explained that these funds offered access not only to gilts, cash and traditional equities, but also to alternative asset classes such as real estate.
Beyond offering diversity, Mr Todd was also keen to emphasise the fund’s cheap annual management charges of 0.3 per cent and ability, through careful forward planning, to weather all types of investment storms.
There are 1.3m auto-enrolment pension schemes that need to be written, which translates into 60 schemes for every financial adviser