Nest cuts spending but black hole widens

Nest cuts spending but black hole widens

The National Employment Savings Trust (Nest) cut its net expenditure after interest and income by nearly £10.5m in the 12 months to the end of March 2018, according to its annual report and accounts.

But the government-backed pension scheme was still carrying a black hole of £76.5m as at the end of March 2018, albeit down from £87m at the same point in 2017.

It also confirmed it had seen the amount it owes to the Department for Work & Pensions – by way of a loan – increased from £539m at the end of March 2017 to £623m.

Article continues after advert

Tom McPhail, head of policy at Hargreaves Lansdown, said Nest had performed a "vital role" in getting auto enrolment off the ground saying that "without them it wouldn’t have been possible", but stressed that consideration now had to be given to the DWP loan.

He said: "There is this outstanding issue now of how, and when, they are going to repay to the taxpayer this very substantial amount of money. The money we are talking about is really quite significant, so this is a question that is going to have to be addressed reasonably soon."

As of March 2018, the pension scheme managed £2.7bn in assets, up from £1.7bn in assets in March 2017. The number of members grew from 4.5m to 6.4m over the same period and the number of employers from 327,000 to 616,000.

Helen Dean, the scheme's chief executive, said that at one point during the year, Nest saw 1,800 employers sign up to the scheme in a single day.

She said: "It’s testament to everyone here at Nest that we’ve been able to handle these unprecedented volumes of new business with exceptional efficiency and supported every employer who wanted to use us.

"We’ve also helped lead the way in developing our innovative retirement date funds and responsible investment strategies. We don’t want to settle for doing the minimum but are finding ways to help drive improvements right across the pensions industry."

The report added that the scheme was now looking to add a commodities fund to investment portfolio to add additional inflation protection and further diversify members’ pots.