In the New Year’s Honours list he was awarded a CBE for contributions to the pension industry, an accolade about which he is characteristically modest.
He said: “Being awarded the CBE feels wonderful. Things like Nest involve a huge effort from many people across a number of organisations, so I hope the award is seen as a recognition of all the great things all those people did to design, procure, build, launch and grow Nest to its current state.”
But becoming such a big name in pensions was something of a surprise. Mr Jones had made his name in the private sector, running NatWest’s branch network before its takeover by RBS. Then one day a headhunter rang to tell him about the prospect of a big job in pensions. The headhunter having convinced him that the job was not “boring”, Mr Jones successfully applied for it. Now that Nest is up and running, and auto-enrolment is firmly established, people might forget what a challenge it had been to set up the organisation.
Mr Jones said: “We had to be ready by October 2012 because it was in statute. If we had been late people would have said it’s a government IT disaster.
“A normal start-up does a simple implementation first, but we had to be ready for the largest, most complicated corporates first, because they were coming in first.”
However, he said he relished the prospect, because: “I love building things. I’m a corporate builder.”
He realised that success relied on planning in great detail. He said: “The design lays out in precise detail what the system you’re about to procure has to do.” It had to accommodate member and employer contributions at fixed points in time, according to a predetermined timetable.
“These high-level statements have to get broken down to precisely each individual element in which computer systems get built,” said Mr Jones. “If you don’t do this you end up in a mess because nobody knows what to build. If you don’t have a clear idea in detail of what you’re going to do, it’s very difficult to succeed.”
Having launched in 2012 – Mr Jones said it was ready by 2011 – Nest currently has 2.62m members and 30,000 employers. As more people come on board, and decide not to use other products in the market, it expects to have 5m members and half a million employers by 2018. This should help shift its £387m loan from the DWP. Mr Jones said: “If you look at 5m people putting in £1,000 a year, which is not an unreasonable estimate, you’ve got £5bn going in. When Nest gets to £50bn or £100bn of assets under management, it will become comfortably self-sufficient.
“The fact that Nest has a legal obligation to serve any employer that wishes to use it makes it completely different from any private sector venture. This means that Nest had to spend a significant amount of money to build corporate scalability.”
The high start-up costs explain the relatively high initial charges to join Nest. There is a 1.8 per cent initial charge and then a 0.3 per cent ongoing charge. Mr Jones said: “It was debated whether it should just be a plain 0.5 per cent. Then it was decided there should be a 1.8/0.3 per cent structure. That banked money into Nest faster.
“The income was always going to be slow, but I’m not remotely surprised about the way the finances look at the moment. As Nest gets assets under management, it will become an engine that generates significant revenue.”
When Mr Jones joined Nest in 2007, it was known as the Personal Accounts Delivery Authority. It was only after Nest had been running as a default employers’ pension scheme for two years that he yielded to a yen for an earlier calling.
While at NatWest, where he had been chief executive of retail banking, he had experimented with a side project called Mondex, which was similar in concept to a digital purse. Developed in the 1990s, before the internet took hold, it would allow people to send money around the world using a gadget resembling an online card reader.
Although the business was sold to Mastercard, it was never commercialised, despite being trialled in several countries, and the concept was quietly shelved. But being in the payments business, Mr Jones never lost sight of his earlier dream, and once Nest was up and running, he told his board he wanted to leave to develop a similar project, this time internet-based.
So after a managed exit, last September he left Nest to embark on his new venture, Tibado, a digital cash system which, if widely adopted, has the potential to eventually replace cash entirely.
The idea is that the digital cash concept will work through a smartphone app allowing users to transfer money anywhere from one ‘pocket’ to another via the internet. It is distinct from a debit card in that it doesn’t allow access to one’s bank account, but acts as a virtual purse that children, for example, can use, or that people can take to transfer money to someone in another country.
The revenue would come from charging for the use of the ‘pocket’, and the business clearly needs to be used by a lot of people for it to work. But Mr Jones believes the concept is compelling, and is talking to potential backers.
He said: “This is going to be a goal measured in years not months, but it’s the last thing I want to do in business life.”
Mr Jones is 60, and plans to work until about 70, while his business partner, David Everett, a security expert with whom he has worked since 1985, is now 70.
Back to working on his own, Mr Jones said: “Different chief executives have different skill sets, and I love building things. Nest was a great thing, especially to build and launch it. Now I’m thinking of something else.
“I’m a private sector person. Nest was the only public sector thing that I’ve done. I miss the people, but I’m sure it was the right thing for both me and Nest for me to move on.”
Melanie Tringham is features editor of Financial Adviser
2015 - present
Co-founder and chief executive, Tibado
2010 - 2015
Chief executive, Nest Corporation
2007 - 2010
Chief executive, Personal Accounts Delivery Authority
2002 - 2005
Chief executive, Simpay
1996 - 2000
Managing director/chief executive, retail banking, NatWest
1993 - 1996
Chief executive, Mondex International
