UK - NEST has today unveiled its investment strategy and published its first statement of investment principles.
It said key elements of its retirement date funds - the default option for its target market - include an investment objective to achieve performance in excess of CPI inflation after management costs.
It said the majority of members would spend most of their savings career in the growth phase - which will target CPI plus 3%. For members under the age of 30 this will be about 30 years.
NEST (National Employment Savings Trust) also said the default option will recognise different phases in a member's saving life time and proactively manage "many different risks".
It said the strategy was based on evidence and research into the specific characteristics of NEST's target market.
And for older members, it seeks to ensure their money is invested in a way that looks to best match when and how they will take their retirement benefits.
Finally the strategy aims to reduce the possibility of "extreme investment shocks" for all members, particularly those nearest to retirement and young members.
NEST Corporation chairman Lawrence Churchill (pictured) said: "Agreeing the investment approach is a significant landmark for NEST in achieving our aim of helping millions to save confidently for their retirement.
"The investment strategy will develop over time and we are confident our approach will encourage saving and support our members in achieving their aspirations for retirement.
"To reflect our diverse future membership NEST's investment approach combines the reassurance of a carefully-managed investment approach for the majority who don't want to choose, with a set of focused choices for members who do want to."
NEST's retirement date funds will use a broad and diversified set of asset classes.
In addition to the NEST retirement date funds, the scheme will provide a "focused range" of other fund choices.
• NEST's Higher Risk Fund will target high returns through taking more investment risk.
• NEST's Lower Growth Fund will take very little investment risk but may not protect against inflation over the long term.
• NEST's Ethical Fund will have similar investment objectives as the NEST Retirement Date Funds but will invest in companies that meet ethical criteria, as well as gilts and our liquidity fund. The fund may well be more volatile than a Retirement Date Fund over the longer term but we will look to manage risk throughout a member's savings career.
• NEST's Sharia Fund will only invest in companies that are compliant with Sharia principles.
• NEST's Pre-retirement Fund is for those members who, in the early years of the scheme, may want to buy a retirement income with their pot rather than target a cash lump sum.
Investment committee chairman Chris Hitchen added: "We carried out extensive research and wide consultation to ensure we put our members at the heart of our investment approach. That led us to develop clear and appropriate objectives and put in place a robust and efficient infrastructure to deliver them. This is an excellent starting point and will provide NEST with solid foundations for the future."
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