In an attempt to bolster its pre-retirement offering, the National Employment Savings Trust (NEST) is set to issue a tender for a collective investment fund.
The proposed fund is likely to invest in a portfolio of bonds to track changes in annuity prices due to changes in interest rates. NEST said the fund will act as a ‘building block’ for the schemes retirement date funds. The scheme is due to be launched in October 2012.
The bond fund will be part of the pre-retirement fund and will be used predominantly to consolidate the members’ final savings.
“We are engaging with providers of annuity tracking funds. At some point, we will add that to the pre-retirement offering”, said Chief Investment Officer Mark Fawcett about the proposed fund.
The secretary of state at the Department of Works and Pensions (DWP), Iain Duncan Smith is hiring more trustees for NEST, said chief executive of NEST Tim Jones. The scheme is allowed between nine and fifteen trustees and Jones said he expects another 2 to 3 trustees to join to the current 7 member board.
“As people move towards retirement, they want to reduce risk, so bonds are a natural type of investment to aim for”, said Adrian Lowcock of Bestinvest, an advisory firm.