Tim Jones, the rock guitarist and pensions supremo who helped usher in the groundbreaking workplace auto-enrolment scheme, is to stand down as chief executive of Nest at the end of this year to pursue his dream to create money out of thin air.
He spent just under eight years in the role at the government-backed pension scheme and its predecessor Pada – established to deliver and manage the personal accounts scheme launched as part of the 2012 pensions reform package.
In April 1983 Mr Jones joined National Westminster Bank, where he stayed for 17 “very happy years” becoming the managing director of its retail banking arm in 1996.
At the time he also held a non-executive director post with Capital One Bank (Europe) from 2003 to 2007.
After NatWest he formed Purseus Limited, a company he described as “focused on a new and simple architecture for ACH (automated clearing house) and correspondent banking payments.”
Mr Jones became chief executive of Mondex International (a digital cash firm that was later sold to MasterCard), for three years from 1993.
In 2002 he was recruited as chief executive of London based SimPay Ltd, formerly the Mobile Payments Service Association, a position he held until July 2005.
He became co-director of the Centre for the Study of Financial Innovation in 2006 before joining Pada in October 2007.
Given this solid background in mobile payment services it comes as no surprise that Mr Jones has announced plans “to pursue a long-standing ambition to develop a global digital money product” in 2016.
Laurie Edmans, a former trustee member of Nest, who knows Tim Jones well, said: “The payments world is where he comes from. All sorts of things are happening in payments as a result of digitisation. It’s the opportunity to do something fresh and new, he could make quite a lot of money if they get it right.”
He added: “I think he’s just ready for a fresh challenge and what can he do with Nest that he hasn’t already done? It’s just a stunning set of achievements on all levels.”
Mr Jones is currently an independent director of Investment Technology Group Inc, a New York-based institutional broker dealer, and is vice-chairman of the Rotman International Centre for Pension Management.
He said: “I’m very proud to have played a part in establishing Nest, and helping millions more people to save for their retirement. I will of course continue to monitor Nest’s progress as the story develops.”
Legacy
Mr Jones oversaw the inception of Nest Corporation in 2010 which has since attracted just under two million members, around 11,000 employers and net assets of £335m.
He spearheaded arguably one of the most significant reforms to retirement savings since the introduction of state pensions.
Set up to facilitate auto-enrolment under the Pensions Act 2008 workplace reforms, Nest is currently in line to see an estimated 1.2 million employers enrol 11m eligible workers by 2018.
Pensions minister Steve Webb said: “His leadership has made Nest a great success; its presence in the market is having a significant effect and everyone being automatically enrolled is benefiting from its influence.
“He will leave behind a legacy of Nest emerging as a force for good, driving up standards and best practice, and giving members a much-needed strong voice in the market.”
Nest chose to review its default investment strategy under Mr Jones in the wake of the changes to retirement announced in last year’s Budget. He is expected to be in office long enough to oversee the implementation of this year’s changes to pension provision, which include the requirement for companies with fewer than 30 employees to sign their workers into a pension scheme by November this year.
Mr Jones added: “By giving early indications of my intentions I hope I’ve demonstrated my on-going commitment to Nest and my desire to help ensure a smooth transition. Rest assured that I will continue to devote my energies enthusiastically to lead Nest through the challenges of 2015.”
It has not all been smooth sailing. Mr Jones came close to leaving the scheme in 2013. He said he considered his position after Nest was hit by a £1.4m fraud involving the diversion of a supplier payment.
He waived his performance-related bonus for the year as a result of the fraud.
Ros Altmann, the government’s business champion for older workers, said: “Tim Jones has been an excellent chief executive at Nest, he has focused on making the organisation as user friendly as possible, on trying to ensure the scheme delivers as well as possible for members and has tried also to simplify the member communications and offer streamlined investment choices that are easier to understand.”
She added: “He has had a very difficult job because Nest has been trying to operate with its hands tied behind its back.”
These “difficulties” could be a reference to the scheme finances which have come under fire in recent years.
The scheme is run by the Nest Corporation on a not-for-profit basis and was initially funded by a £171m loan by the department for work and pensions. This figure has since risen to £299m, according to Nest latest annual report.
The loan agreement also requires Nest to charge 1.8 per cent contribution charge, and an additional 0.3 per cent annual account management levy until the loan has been paid off.
However, this is not an area for concern, according to Tom McPhail, head of pensions research at Bristol-based Hargreaves Lansdown, adding: “It would not have been possible to bring in auto- enrolment without something like Nest which needed to be paid for. The taxpayer has not been burdened with the cost, which is a good thing, and the scheme adds competition to the market.”
Ms Altmann said: “A simple, single charge would be much fairer for members and make Nest more attractive, but the government did not allow this.”
Mr McPhail disagrees. He said: “I think the price is pretty fair for the market. There is no way the industry could deliver the same service at the same price. What you have to remember is that the scheme caters for small businesses, like a building company which might only employ three people for example.”
What is more, the government imposed a limit in the amount members of the scheme can put into their respective retirement pots to a maximum of £4,600 a year – in a bid to limit the competitive advantage of a not-for-profit provider that benefits from a state funding.
However, the government has said it will move the limit in April 2017 – crucially before minimum contributions are due to rise to 5 per cent in October 2017.
“Such restrictions meant many employers would not use Nest if they wanted just one pension scheme and that locked out much of the market,” Ms Altmann said.
The announcement of Mr Jones’ resignations comes a few weeks after Otto Thoresen joined as part-time executive chairman of Nest from the ABI.
Mr Edmans denied that Mr Thoresen’s appointment had anything to do with his decision, adding: “His words to me about Otto [is that] he’s hit the ground running, they know each other well.”
He added: “He was only positive about Otto, I think appropriately so”
Outside the office, Mr Jones has made little effort to disguise his love for rock music. A proficient electric guitarist himself, his “heroes” of the genre include Rory Gallagher and Steve Marriott.
In 1981 he formed the Deckchairs, a rock band that gigged up and down Sussex for nearly two years before disbanding.
Myron Jobson is a features writer of Financial Adviser
Key points
* Given Mr Jones’ background in mobile payment services it comes as no surprise that he has announced plans “to pursue a long-standing ambition to develop a global digital money product”.
* According to Ros Altmann Mr Jones has had “a very difficult job because Nest has been trying to operate with its hands tied behind its back.”
* The pensions minister described Mr Jones leadership of Nest as “a great success”.