Nest updates its investment strategy for members aged 60 and over

The scheme has launched a new retirement hub on its website, with information and videos helping members think through their options and understand what steps they might need to take as they approach the time they may be considering accessing their money.

Alongside the new retirement hub, the scheme will be sending members refreshed ‘wake up’ communications encouraging them to think ahead and plan early. These are designed to prompt members to think about things like, what type of retirement investment strategy might meet their needs and where to access it, as well as signposting services like PensionWise or independent financial advice. 

In addition, Nest members will now have access to a post-retirement fund (Nest Guided Retirement Fund) that will keep their money appropriately invested should they choose not to withdraw it immediately. 

Nest’s members can already access their pots via uncrystallised fund pension lump sums (UFPLS) from aged 55. The Nest Guided Retirement Fund will now be available for Nest members aged between 60 and 70 who have £10,000 or more in their pot. It will keep most of the money invested while de-risking an annual amount that can be withdrawn if needed as one or multiple UFPLS payments up to age 85, while also setting some money aside to be available for an annuity purchase. Being invested in this fund does not lock members into a decision and they can withdraw their pot at any time or choose to do something different with it.

The options available to Nest members include,  

• transferring out of Nest or withdrawing their pot entirely, 
• taking their money as UFPLS in single or multiple instalments from age 55 (this has been available since 2016),
• remaining invested in an appropriate investment fund for a shorter or longer time depending on different needs.

Members will have to transfer their money out of Nest if they wish to purchase an annuity or invest in a flexi-access drawdown product.

Commenting on the update, Mark Rowlands, Director of Customer Engagement said,

“By 2025 Nest will have more than 1.75 million members aged 55 plus and for most of them retirement is no longer a cliff edge. Many are likely to choose to work for longer, for example, and we don’t think they should miss out on investment returns during these transition years. Pension schemes need to keep up with retirement realities. Our new retirement hub and support services will help guide our members through their choices, and for those who are still making up their minds we’ve now got more appropriate investment funds to suit them.”

From July 2020 if, after receiving their wake-up packs, members with pots of £10,000 or more do not notify Nest of their retirement plan(s) by their intended retirement age, they’ll be placed into the Nest Guided Retirement Fund. Members with less than £10,000 at retirement, who are more likely to want to take all their pot as cash or consolidate it with other pots, will continue to be invested in low-risk assets via the Nest Post Retirement Fund as is currently the case.