The National Audit Office (NAO) has censured Nest for making irregular payments totalling £100,000 to retain staff in key posts.
Nest made payments totalling £100,000 to 2 individuals in two payments – £30,000 paid in 20/21 and £70,000 paid at the start of the 21/22 financial year. The payments were approved by Nest’s nominations and remuneration committee but no consultation took place with Nest’s sponsor department or the Treasury at the time, despite Treasury approval being required.
Once the payments were revealed Nest submitted a business case to the Treasury requesting retrospective approval but this was rejected because the Chief Secretary to the Treasury did not agree with Nest’s rationale for making the payments, nor the nomination and remuneration committee’s approval of them.
The Treasury was not satisfied with the justification Nest provided for making the payments, saying it did not meet regulatory requirements for sufficient market evidence to justify the use of retention payments, evaluation of the risks to public funds and the cost of alternative options.
Nest has taken actions to strengthen controls around special payments and said the retention payments would provide better value for money compared to operational costs of potentially hiring equivalent of skilled individuals were they to leave the provider. It has not named the individuals who received the payments.
Nest’s loan from the DWP stood at £884m last March, up from £778m a year previously. Nest’s March 2021 forecast predicts it will break even in 2024 and repay its loan in 2038.
A Nest spokesperson says: “We take managing public money extremely seriously and as soon as we became aware of the error, we alerted the NAO and sought to rectify it with HMT. We have taken steps to ensure it won’t happen again.
“Delivering best outcomes for members is our number one priority and we made these payments in good faith with that goal in mind, seeking to deliver overall better value for money and better services for our members.”