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Nest receives quality scheme approval

Nest receives quality scheme approval

An independent report has endorsed the government's workplace pension scheme Nest as a quality scheme with "robust internal controls".

The scheme's fourth master trust assurance report, completed by KPMG, looked at a range of control objectives, including administration, investment, governance and information security.

In the introduction of the 20-page report Otto Thoresen, chairman of Nest, said: "It’s important for our employers and members to understand that this assurance report isn’t just a paper exercise for us. We’ve completed it thoroughly, transparently and in accordance with best practice.

"Employers choosing us for their workers can be assured that they’re getting a scheme with good governance, low charges and clear member communications."

The assurance report is just one of the ways that Nest has been independently assessed as being a quality scheme in the auto enrolment pensions market.

The organisation has also achieved the Pensions Quality Mark READY status and received a Defaqto 5-star rating.

The report applauded how the scheme and member assets are safeguarded from loss, misappropriation and unauthorised use. It added: "Financial protection and compensation available to members in the event of a default is assessed and documented.

"The design and on-going suitability of the default arrangement and range and risk profile of other investment options are regularly reviewed and monitored. The performance of each investment option, including the default arrangements, in which member funds are invested are regularly reviewed and monitored against objectives in the statement of investment principles."

The document also outlined how Nest excels at communication. The report said: "Nest Corporation produces clear and concise communication materials for members and employers.

"Designed to be easy to understand and engaging, these communications are underpinned by Nest’s golden rules of communication. This outlines eight principles for effective communications, such as using plain language and real life examples to bring communications to life.

"These have been incorporated into all communications to help ensure they’re relevant to their audience."

The report added: "Recruitment and retention of staff and the working environment are key areas of focus for the trustee and executive team alike.

"Nest Corporation recognises that it has a responsibility to foster a culture in which acting with integrity is the norm and all staff can act in an open and honest manner. Nest Corporation recognises that its staff need to be well supported by management to prepare for future career development."

Nest is one of the first schemes to complete type 1 and type 2 AAF 02/07 reports against the master trust assurance framework, developed by The Institute of Chartered Accountants in England and Wales  and The Pensions Regulator.  

Alan Chan, director and chartered financial planner for London-based IFS Wealth & Pensions, said: “It’s good to hear that the NEST scheme has been endorsed by an independent report.  Good culture and controls within the business are the foundation to a good pension provider. These can be important factors to consider and does give more confidence to users but ultimately the clients need a pension provider that is flexible enough to meet their requirements and the service level has to be very good, particularly when things do not go smoothly. It never does with auto-enrolment!”