NEST has appointed Rothesay to co-design an insured longevity risk solution for its members as an important part of its sustainable lifelong retirement income offering.
The master trust claims its bulk deferred annuity for defined contribution (DC) pension savers will be a “market first in the UK”.
It said that once the co-design has been completed successfully, NEST will purchase bulk deferred annuities for cohorts of members from Rothesay. The bulk deferred annuity will pool longevity risk and be a key part of NEST’s trustee-managed sustainable income solution for members.
NEST said that by blending an insured solution alongside the predominantly invested elements of a member’s retirement income portfolio, the master trust will aim to provide higher incomes for its members than traditional approaches.
Income levels and investment strategy will be set by Nest to ensure sustainability, while the deferred bulk annuity will provide certainty that members won’t run out of money in retirement.
NEST claims all this will be done while allowing 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. NEST believes this will improve outcomes for all UK DC pension savers.
Ian Cornelius, chief executive officer at NEST, said: “The government, in its Pensions Bill, is calling on all pension schemes to offer guided retirement pathways for UK savers.
“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.”|
He added: “We want to help build financial peace of mind for all UK savers. Our solution will aim to provide a lifelong income solution to NEST’s members and provide certainty that they will not run out of money in retirement.”
Graham Butcher, chief financial officer at Rothesay, added”: “Rothesay will leverage its purpose-built systems, risk management and execution capabilities developed in the DB pensions market and apply these for the benefit of DC pension scheme members.
“This is an important step forward in transforming retirement outcomes for DC members, and we are delighted to have been selected to partner with Nest in this groundbreaking initiative.”
