Nest has updated its investment strategy for members aged 60 and over, offering a new retirement fund for those looking to keep their money invested beyond retirement.
This ‘guided retirement fund’ is available for members aged between 60 and 70, who have £10,000 or more in their pot.
Nest says this fund will take an ‘appropriate’ investment strategy that reflects the age demographic of this group. It will keep most of the money invested, while de-risking an annual amount that can be withdrawn, if needed as one or multiple UFPLS payments up to age 85.
The fund will also set some money aside to be available for an annuity purchase.
Nest is not permitted to offer income drawdown to its members, under rules established when it was created. Members wanting to access tax-free cash will need to leave the fund.
To support members as they approach retirement Nest has also launched a new ‘retirement hub’ on its website, with information and video to help people understand the various options available and what steps they might need to take prior to accessing their money.
Nest’s 8.6m savers will also also receive refreshed ‘wake up’ communications as they get closer to retirement age. This will encourage them to think ahead and plan early as well as signposting services like PensionWise.
Nest’s members can already access their pots via uncrystallised fund pension lump sums (UFPLS) from aged 55.
Nest said that being invested in the new retirement 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.
This can include transferring out of Nest, withdrawing their pot entirely, or taking their money as UFPLS in single or multiple instalments from age 55. 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.
Nest’s director of customer engagement Mark Rowlands says: “By 2025 Nest will have more than 1.75m 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, eligible members do not notify Nest of their retirement plans by their intended retirement age, they’ll be placed automatically placed in this new 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.