Nest partners with Rothesay for new type of retirement solution
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Defined contribution trust Nest has appointed Rothesay to co-design an insured longevity risk solution for its members, ahead of a new requirement to offer a default retirement pathway. Rothesay expects to be able to do the same for other DC schemes in the UK and elsewhere.
Nest, which manages £60bn of pension assets, has partnered with buyout specialist Rothesay to co-design a bulk deferred annuity for its DC members in what the master trust decribed as “a market first” in the UK.
Nest chief executive Ian Cornelius said the lifelong pension income solution has “the ambition to provide a higher average income” to Nest’s 14m members, while allowing flexibility to members to change their minds about how their money is being managed throughout most of their retirement.
Pointing to an upcoming new legal requirement on trustees to offer guided retirement to DC savers, he added: “To deliver this, and support our members, we’re developing a lifelong retirement income solution which will play a vital role for those members who want and expect their pension provider to deliver a pension income for them, not a pot.”
Members find it hard to manage the multiple risks they face in retirement on their own, he argued, calling the partnership with Rothesay potentially “transformational not only for our members, but all DC savers”.
Graham Butcher, the chief financial officer of Rothesay, added: “Rothesay is purpose-built to protect pensions. We are delighted to have been chosen to design and deliver this innovative solution that will be transformative for the DC pensions market, bringing enhanced, long-term financial security to Nest members and DC pension savers across the UK, allowing them to maximise their retirement resources without the fear of running out of money.”
Butcher argued that the partnership marks an important step in transforming retirement outcomes for DC members.
Nest, which manages £60bn of pension assets, has partnered with buyout specialist Rothesay to co-design a bulk deferred annuity for its DC members in what the master trust decribed as “a market first” in the UK.
Nest chief executive Ian Cornelius said the lifelong pension income solution has “the ambition to provide a higher average income” to Nest’s 14m members, while allowing flexibility to members to change their minds about how their money is being managed throughout most of their retirement.
Pointing to an upcoming new legal requirement on trustees to offer guided retirement to DC savers, he added: “To deliver this, and support our members, we’re developing a lifelong retirement income solution which will play a vital role for those members who want and expect their pension provider to deliver a pension income for them, not a pot.”
Members find it hard to manage the multiple risks they face in retirement on their own, he argued, calling the partnership with Rothesay potentially “transformational not only for our members, but all DC savers”.
Graham Butcher, the chief financial officer of Rothesay, added: “Rothesay is purpose-built to protect pensions. We are delighted to have been chosen to design and deliver this innovative solution that will be transformative for the DC pensions market, bringing enhanced, long-term financial security to Nest members and DC pension savers across the UK, allowing them to maximise their retirement resources without the fear of running out of money.”
Butcher argued that the partnership marks an important step in transforming retirement outcomes for DC members.
How will it work?
When the solution is ready, Nest will purchase bulk deferred annuities for cohorts of its members from Rothesay. This will pool longevity risk and become a key part of Nest’s trustee-managed sustainable income solution for members.
The insured solution will be blended alongside the predominantly invested elements of a member’s retirement income portfolio, with income levels and investment strategy set by Nest. It will be done in a way that will allow flexibility for members to change their minds about how to fund their retirement.
Following the completion of co-design, Rothesay will be able to develop similar insurance solutions for other DC schemes in the UK and around the world.
