Mercer has broadly welcomed proposals to allow the National Employment Savings Trust (NEST) to develop services that would allow its members to access a wider range of options on retirement, as permitted by the recent pensions reforms. However, in its response to the Department for Work and Pensions’ recent consultation Mercer questioned whether developing decumulation services for its members would actually be the best use of NEST’s resources at this time.
“We see no reason to prevent NEST from providing its members with decumulation products and services in the future,” said Dr Brian Henderson, Partner at Mercer. “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.
“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.”
Mercer’s response also highlighted the current “collegiate” relationship that NEST has with the rest of the pensions industry, with most specialist advisors freely giving their time and input to help NEST along with its thinking. Dr Henderson pointed out that this would be unlikely to continue were NEST to start being seen as a direct competitor as opposed to a “provider of last resort”.
Commenting on the proposed principles laid out in the consultation Mercer agreed on the list but suggested an order of priorities. Dr 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.”
Notes to Editors
About Mercer
Mercer is a global consulting leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and careers of their most vital asset – their people. Mercer’s more than 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With annual revenue of $13 billion and 60,000 colleagues worldwide, Marsh & McLennan Companies is also the parent company of Marsh, a leader in insurance broking and risk management; Guy Carpenter, a leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a leader in management consulting. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer. In the UK, Mercer Limited is authorised and regulated by the Financial Conduct Authority.
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