The Department for Work and Pensions revealed in late April 2017 that its loan to Nest (National Employment Savings Trust) will reach an expected peak of £1.22 billion in 2026. This figure is more than double what Nest currently owes the government — £539 million.
Nest is a state-sponsored auto-enrolment trust that was established to provide pensions for the employees of small employers and those with low-earning employees, who would typically find it difficult to find a pension provider that would accept contributions as low as the 2 percent initial minimum that was stipulated with the auto-enrol program.
Nest has more than 4.5 million enrollees, more than 300,000 participating employers, and more than £1.6 billion in managed assets.
DWP permanent secretary Sir Robert Devereux stated on the record that Nest would repay its debt to DWP by 2038. Following that, Nest would fund its operations through the collection of member fees.
However, Sir Devereux pointed out that these are projections and are subject to change:
There are inherent uncertainties surrounding these core assumptions. These include market uncertainty (which affect Nest’s market share, member volumes and the characteristics of members); macroeconomic uncertainty (which affect the relative growth in incomes of members and the performance of global markets); and member behaviour (opt-out and cessation rates).
To read the full article in the FT Adviser, click here: https://www.ftadviser.com/auto-enrolment/2017/04/25/nest-loan-to-balloon-to-1-2bn/