Proposals to allow the National Employment Savings Trust (Nest) to introduce services that would allow its members to access a wider range of retirement options have been welcomed by Mercer.

Mercer highlighted in its response to the Department for Work and Pensions’ consultation, that while proposals have been well received, it has been questioned whether the development of decumulation services for its members would be the best move for Nest’s resources at this time.

The consultation has identified that the pensions landscape has significantly changed since the establishment of Nest. Both the way people access their savings and peoples’ attitude towards retirement, viewing it as a period of transition rather than a sudden event, has altered dramatically.

As a result of this, the DWP has called for evidence as to how Nest might evolve with the changing climate.

Mercer partner Dr Brian Henderson said: “We see no reason to prevent Nest from providing its members with decumulation products and services in the future. However, as most Nest members have yet to build up enough funds to make drawdown a viable option it is probably too premature and not in members’ best interests at this stage. More clarity is also needed on where the funding for developing such products and services would come from.”

Mercer also noted that the master trust currently has an educational relationship with the rest of the pensions industry, with most specialist advisors freely providing assistance to Nest. Henderson stated that this may not continue if Nest were to become a direct competitor rather than a “provider of last resort”.

“For the time being Nest’s focus should remain, very strongly, on ensuring individuals build up meaningful levels of pensions savings to help improve retirement outcomes. Importantly, it should work to educate and encourage members to increase their contribution rates over and above minimum mandatory amounts,” Henderson added.

Commenting on the proposed principles laid out in the consultation Henderson said: “The consultation laid out a good list of principles but they should not necessarily carry the same weight. Most important, for a scheme with Nest’s member profile, is providing value for money.”

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