Ian Cornelius: It's been an exciting strategy to build our brand and promote people engaging with their pension
Earlier this year, the government-backed master trust Nest unveiled its new purpose of “building financial peace of mind for all”. Chief executive (CEO) Ian Cornelius speaks to Martin Richmond about the organisation’s 2030 corporate strategy and what the government’s ongoing suite of pension reforms means for its members.
Ian Cornelius has now been in his role at Nest for over 18 months, having been appointed as interim CEO in April 2024 and subsequently appointed on a permanent basis in June this year. Cornelius says Nest is a "special" and "unique" organisation and one he feels "proud" and "privileged" to be running.
He says: "All credit to those who went before me. They have built an organisation which is really impressive, looking after over 13 million members with almost £60bn of assets and kept it focused on the underserved, largely low to moderate earners. Nest is serving an important purpose in helping make sure those people have a pension."
Cornelius notes the growth in assets in assets under management held by defined contribution (DC) schemes is a product of auto-enrolment (AE) – a policy he says has been a "huge success" in increasing participation in workplace pensions from 50% prior to its introduction to nearly 90% today.
'Best-in-class' provider
Cornelius says Nest began work on the development of its 2030 corporate strategy shortly after he became CEO, as there was recognition that there was not a "joined-up" corporate strategy in place. Cornelius also notes that despite the master trust having redefined its purpose of building financial peace of mind, it did not necessarily have the "clarity of strategy" to work out how it was going to deliver on this purpose.
"We did a big and collaborative piece of work with the board, the executive committee and involving the broader stakeholders, to define our strategy," he explains. "The strategy is all about becoming a best-in-class pension provider, and it's grounded in four member-centric goals. Those are helping to maximise people's pensions, to make sure they contribute what is right for them, making their money go further in retirement, and building their day-to-day financial resilience. We're all about our members as our purpose is wholly to deliver benefits for our members."
Creative collaboration
Cornelius says Nest's strategy is now starting to "come to life" in "a creative and impactful way" and cites Nest's pensions awareness campaign in collaboration with stop-motion animation studio Aardman as an example of this. The campaign consisted of two short videos produced by the studio in their signature style to increase awareness about pensions.
Cornelius explains: "It's only been launched as a pilot at this stage. We wanted to test how it was received and make sure we could manage any impact. It's been an exciting strategy to build our brand and promote people engaging with their pension.
"Pensions are generally seen as scary and hard for people to engage with. Working with Aardman, who are well-known and very creative, they produced two brilliant 30-second adverts for us. It makes pensions that much more accessible, which is important as Nest has a third of the working population who need to engage with their pension. The early results are really encouraging, and we expect that to be rolled out more widely."
Lofty aspiration
Regarding Nest's 2030 corporate strategy more broadly, Cornelius emphasises the importance of ensuring it is "grounded" in the best interests of Nest's members and starts with the "ambitious" purpose of building financial peace of mind for all.
He explains: "When we say for all, it is about being inclusive. We're here for a population who aren't necessarily always well-served by the broader market, and to make sure we serve that underserved population. People don't just want a pension, they want financial peace of mind, which is a lofty aspiration. But it means making sure they have the right pension provision."
Cornelius states this is a "fundamental" aspect of Nest's corporate strategy, which will focus on helping members not just save a pot of money for their retirement but turn their pot into a "meaningful" and "sustainable" source of income. He says this is an area which has "not been well served by the whole market".
He adds as part of its corporate strategy, Nest has made further developments to its app, which he says is a way to make the pension it provides to its members more "accessible". He says a broader implementation of its strategy is delivering a "world-class" investment capability.
Cornelius explains: "We're investing heavily in private markets as growing our private market allocations is giving low to moderate earners access to investment options that are usually reserved for high net worth individuals. To continue to build out that capability will be important, but we also see we have a role in helping to shape the broader system to make sure it better meets the needs of low to moderate earners. That's why we're delighted to see things like the Pensions Commission to look at adequacy and inclusivity."
Cornelius acknowledges the goal of delivering financial peace of mind is not something Nest will deliver "overnight" or even over the next five years but he says the strategy is a fundamental move towards delivering a "quality whole of life pension proposition" which "maximises the value of pensions and delivers sustainable income in retirement".
Important step forward
Since coming into power in July 2024, the Labour government has enacted several reforms to the UK's pensions system, with the Pensions Investment Review and the revival of the aforementioned Pensions Commission. However, its most significant measure since taking office has been the Pension Schemes Bill, which was laid in June, and has been progressing through parliament. The bill is expected to receive Royal Assent in 2026.
Cornelius says the bill represents the "largest shake-up" the pensions industry has seen in a decade. He states while the creation of the government-backed master trust in 2011 and AE a year later marked "massive" interventions in the market, which increased the number of people saving into a pension, there has not been "a great deal of change from a policy perspective".
"AE has done a good job in helping build pension pots for individuals, but it is not delivering an income in retirement. The Pension Schemes Bill requires schemes to deliver default and guided retirement solutions to deliver that income in retirement.
"This is an important step forward because when we research and ask our members what is most important in retirement, they want to maximise their income and for that income to be sustainable. They also want flexibility in how they take it."
Cornelius also notes an unintended side effect of the introduction of AE is the issue of the proliferation of small pots, of which Nest has 4.7 million. He says the existence of these pots is "not efficient" from either a member's perspective or a cost perspective as they are "scattered" and hard for members to keep track of.
He says the measures in the Pension Schemes Bill to address the issue of small pots is "very welcome", as well as the measures in the bill to create a value for money framework for DC schemes, as it will improve the transparency for members and "shift the focus from cost to value".
Cornelius notes: "Cost is important, but value is more important, so looking at investment returns and net of costs is helping employers, consultants and members get value for money is a welcome move. These are positive and timely measures."
Enthusiastic advocates
Alongside the measures in the Pension Schemes Bill, the government has signalled its desire for pension schemes to invest in the UK. In May, Nest was one of 17 providers that signed the Mansion House Accord, a voluntary agreement for these providers to invest at least 10% of their DC default funds in private markets by 2030.
Cornelius explains Nest believes investing in the UK is a "good thing" and goes back to its approach to putting members and their interests first.
"There are attractive investment opportunities in the UK and particularly in private markets. They deliver better returns to members, and they help diversify risk. We are enthusiastic advocates of investing in the UK and in private markets.
"This is demonstrated by the fact that 18% of our assets are invested in private markets and 20% of total assets are invested in the UK. This is the right thing for our members in terms of returns, but it is also investing in the UK economy and our members' jobs and the infrastructure they use in their communities. It is benefiting our members in more than one way."
Cornelius says Nest is "fully supportive" of the targets outlined in the Accord, as well as the Sterling 20 initiative. He notes while there may be sceptics as to whether these targets are attainable for pension providers, he says Nest is demonstrating these can be reached, and adds there is "intent" among the providers that signed to deliver on these aspirations.
A ‘holistic' look
As a pension provider with nearly 14 million members, Nest is also well-placed to address the financial disparities in retirement outcomes that exist in the form of the gender and ethnicity pensions gaps. Cornelius says Nest and the industry as a whole can take measures to close these gaps, but caveats that addressing them is "complex".
"These gaps are not what we'd like to see. It is complex, which is why we welcome the Pensions Commission, as this is very much within the scope of the commission".
Cornelius adds that the commission will need to take a "holistic" look at addressing these gaps as a factor in these gaps is driven by people having "complex working arrangements", such as part-time jobs or self-employed.
"There will be ways to improve those gaps and provision for underserved populations, but the industry needs to do this together. I'm optimistic about the role the commission can play and what will come out of the commission that will help in that space."
Not a panacea
In November, the government announced financial education would become compulsory for all primary school pupils in England as part of an overhaul of the national curriculum to improve financial literacy.
In addition, the government published its Financial Inclusion Strategy, where it was announced Nest Insight, the Money and Pensions Service, and The Investing and Savings Alliance would bring a "national collation of employers" to support an increase in the take-up of payroll savings.
Cornelius says these initiatives can "only be helpful" but are "not a panacea".
"They are positive measures, but they won't be sufficient to address all the challenges with saving for today and saving for a pension tomorrow."
