Slides matt harman nest

Automatic enrolment – are you ready?

Matt Harman Relationship Manager 11th September 2014 Leicester Protect

Legal information © NEST Corporation 2014. All rights reserved. This information doesn’t constitute financial, investment or professional advice and shouldn’t be relied on.

We don’t make any personal recommendation or give advice to employers and their workers on how to make investment decisions. If you’re considering using NEST you might want to talk with an appropriately qualified financial adviser.

We don’t give any undertaking or make any representation or warranty that this document is complete or error free. We don’t accept responsibility for any loss caused as a result of any error, inaccuracy or incompleteness.

Any form of reproduction of all or any part of [these slides] is not allowed. © NEST Corporation 2014

Overview Automatic enrolment and pension reforms What does NEST offer?

Supporting employers into NEST

Š NEST Corporation 2014

Reforming workplace pensions Why? What? How?

Š NEST Corporation 2014

Living longer and working less

Number of retired people per 1,000 people of working age

Source: Population estimates and 2008-based principal population projections, Office for National Statistics Š NEST Corporation 2014

Notes: 1. OADR = old age dependency ratio. SPA = State Pension Age. 2. Working age population is defined as individuals aged 16 to SPA. 3. Ratios between 1971 and 2010 are based on mid-year population estimates. From 2011 onwards, ratios use 2010-based mid-year population projections.

4. SPA changes are those contained in the Pensions Acts 1995, 2007 and 2011.

For the purposes of this analysis, the changes are applied to the UK population, but it should be noted that pensions in Northern Ireland are a devolved matter and legislation equivalent to the Pensions Act 2011 is still under discussion.

2012 reforms: what’s changed?

Before Employers chose whether to contribute Active choice often needed from worker

2012 and beyond Employers have to offer a contribution to certain jobholders Do nothing = save in a pension scheme

Behavioural barriers to take-up

Automatic enrolment

Not economical for existing providers to supply lower earners

NEST is designed for the new majority of pension savers

Saving was a ‘minority sport’

Saving is the norm

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Who does what?

Scope of automatic enrolment Staging and phasing timetable Compliance with employer duties Sets governance standards for qualifying schemes Regulator of workplace pension schemes and providers, including NEST

A new pension scheme established by statute, run as a trust Public service obligation to accept all employers who want to use NEST to meet their employer duties Š NEST Corporation 2014

Automatic enrolment: On your marks...

Which workers you need to automatically enrol?

Who you will need to make contributions for? Š NEST Corporation 2014

Do you know...

If you can use your current scheme to meet your new duties?

When your staging date is?

Developing advisory services Read guidance from The Pensions Regulator (TPR)

Guidance notes available at

tpr.gov.uk

Š NEST Corporation 2014

Staging

Phasing

DWP’s staging and phasing

Employers with 250 or more staff

Oct 2012

Š NEST Corporation 2014

Feb 2014

1 per cent employer contribution

2 per cent employer contribution

3 per cent employer contribution

1 per cent member contribution

3 per cent member contribution

5 per cent member contribution

Apr 2014

Employers with fewer than 30 staff

Employers with 30 to 49 staff

Employers with 50 to 249 staff

Apr 2015

Aug 2015

Oct 2015

Jan 2016

April 2017

Oct 2017

Oct 2018

And just round the corner‌ 140000

120000

We are here

100000

80000

60000

40000

20000

0 41760 41821 41883 41944 42005 42064 42125 42186 42248 42309 42370 42430 42491 42552 42614 42675 42736 42795 42856 42917 42979 43040 43101 43160 41730 41791 41852 41913 41974 42036 42095 42156 42217 42278 42339 42401 42461 42522 42583 42644 42705 42767 42826 42887 42948 43009 43070 43132

Number of private sector employers expected to stage Š NEST Corporation 2014

And just round the corner‌ 140000

120000

We are here

100000

80000

60000

40000

20000

0 41760 41821 41883 41944 42005 42064 42125 42186 42248 42309 42370 42430 42491 42552 42614 42675 42736 42795 42856 42917 42979 43040 43101 43160 41730 41791 41852 41913 41974 42036 42095 42156 42217 42278 42339 42401 42461 42522 42583 42644 42705 42767 42826 42887 42948 43009 43070 43132

Number of private sector employers expected to stage Š NEST Corporation 2014

And just round the corner‌ 140000

120000

We are here

100000

80000

60000

40000

20000

0 41760 41821 41883 41944 42005 42064 42125 42186 42248 42309 42370 42430 42491 42552 42614 42675 42736 42795 42856 42917 42979 43040 43101 43160 41730 41791 41852 41913 41974 42036 42095 42156 42217 42278 42339 42401 42461 42522 42583 42644 42705 42767 42826 42887 42948 43009 43070 43132

Number of private sector employers expected to stage Š NEST Corporation 2014

What does NEST offer?

© NEST Corporation 2014

Designed for the target market Ready for automatic enrolment Clear communication Online Travels with the member Award-winning investment approach Great value Delegated access Š NEST Corporation 2014

How NEST can be used Sole scheme

offered to all workers

As an entry level scheme

where the existing scheme has a waiting period

For a particular group of workers

to sit alongside existing scheme already in place for a different group of workers

As a base scheme

where minimum contributions are made for all workers, using another scheme to ‘top up’ contributions

As your automatic enrolment scheme

letting you keep your existing voluntary scheme while being sure that you’ve got your duties covered

© NEST Corporation 2014

Charging structure

Annual management charge 0.3 per cent

Š NEST Corporation 2014

and

Charge on new contributions 1.8 per cent

Charges – how will NEST compare?

Stakeholder scheme

87

13

0.5 per cent AMC

93.4

6.6

NEST level

94.2

5.4

0% Remaining fund Reduction due to charges © NEST Corporation 2014

100%

DWP guidance and strategy design Tailored Clearly Clear objectives labelled risk management funds – designed to protect around members members and deliver best outcomes

NEST 2058 Retirement Fund

NEST 2039 Retirement Fund

Income seeking assets

Growth seeking assets

UBS Global equity

Š NEST Corporation 2014

BlackRock Diversified beta

NEST 2022 Retirement Fund

LGIM

TBA

Direct and listed real estate

Emerging market equities

RLAM UK corporate bonds

BlackRock Sterling cash

SSga Gilts

SSga Index-linked gilts

Our response to Budget 2014 Reviewing elements of our investment approach Different approaches to accessing pension pots – Investment through retirement?

– Drawdown?

– Staggered vesting?

– The future role of annuities?

– The role of default funds up to and through retirement?

Consulting with the industry throughout the year – need to get this right in a rapidly evolving market © NEST Corporation 2014

Award-winning investment strategy

Best DC Investment Initiative Award

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Best Use of DC and Hybrid Structures

Best Investment Strategy

Best risk management solutions

Best Newcomer to Real Estate

Restrictions and unique features One price for all

Contribution Contribution cap limit

Transfer ban Transfers

Public service obligation

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Only a pension

Who’s using NEST?

And 1000’s more © NEST Corporation 2014

Supporting employers into NEST

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NEST online – our public website

© NEST Corporation 2014

Communicating NEST

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NEST online – our employer website

© NEST Corporation 2014

Supporting employers into NEST

Employers

Š NEST Corporation 2014

Pension providers Employee benefit consultants Other advisers Software providers Payroll providers Third-party admin

Lessons learned from large employers Managing automatic enrolment via payroll/HR/middleware/ new IT solutions is complex NEST can handle large files of data very efficiently but employer data quality is vital – testing formats is key Employer communication to the workforce is critical Employers use postponement and people opt in Opt out rate currently 8%, lower than expectations – of those 95% opt out electronically Worker enrolment volumes aren’t always predictable to the employer – estimated numbers vs. actual payroll assessment

© NEST Corporation 2014

Supporting employers into NEST

Employers

Š NEST Corporation 2014

Pension providers Employee benefit consultants Other advisers Software providers Payroll providers Third-party admin

How NEST and you fit in Delegated access

Understanding regulations

Š NEST Corporation 2014

Assessment and planning

Scheme selection

Get them up and running

Managing the scheme

Compliance/ monitoring

Key statistics Around 1.5 million members Our opt-out rate is around 8 per cent Working with more than 8,800 employers to help them meet their automatic enrolment duties Currently around ÂŁ200m in assets under management

Š NEST Corporation 2014

What NEST offers We’ve got it covered We’re designed for automatic enrolment NEST Retirement Date Funds are right for most workers Sharia, ethical and different risk funds at the same low charge Straightforward approach for members and clear communications Sophisticated risk management, investment and governance structures International expertise throughout the supply chain Pots that travel with the member when they leave Comprehensive support through our website

© NEST Corporation 2014

What NEST offers We lighten the load Plain language templates for communications to workers Decision trees, tools and explanatory guides Preset contribution levels and enrolment types Electronic opt-out by web or telephone All NEST administration can be delegated to third party or internal specialists

Š NEST Corporation 2014

Contact NEST - advisers If you’re an adviser: Email us at intermediary.enquiries@nestcorporation.org.uk Visit nestpensions.org.uk/NESTforadvisers

Š NEST Corporation 2014

Š NEST Corporation 2014

nestpensions.org.uk