Ian Cornelius: Broaden the fiduciary duty and extend the PSB's scope
The UK is entering a new era in how we think about pensions and about the role these savings can play in shaping our economy.
This week, I had the opportunity to speak to the House of Commons Public Bill Committee about the Pension Schemes Bill, which was introduced to Parliament in June.
The Bill is the largest shake up in the pension industry in a decade and its intervention is hugely welcomed by Nest.
The core of the Bill aims to strengthen the UK's workplace pensions system by driving consolidation and creating larger, better-governed schemes that can deliver improved value and outcomes for savers.
A key proposal is the introduction of a statutory framework for consolidation, including measures like contractual override powers to facilitate scheme transfers, standards for small-pot consolidation, and new requirements around value for money.
Nest believes that consolidation is critical to unlocking the full potential of pensions. Scale matters – and Nest is living proof of what size can deliver. Today, with one in three UK workers saving with us and over £50bn in assets under management (AUM), we have the scale to make innovative, long-term investments for our members.
Nest has always been a major investor in the UK, with more than £11.4bn invested here, representing around a fifth of Nest's AUM. From Hornsea 1, one of the world's largest offshore wind farms, to Forth Ports, the Dolphin Shopping Centre in Poole, and the revitalised India Building in Liverpool. These aren't just investments; they're catalysts for growth, creating jobs and supporting UK's transition to a low-carbon economy – while first and foremost helping to deliver strong returns for our members.
We see illiquid assets as a powerful driver of long-term value. That's why we've set an ambition to increase our allocation from 18% to 30% by 2030.
Analysis using JP Morgan's long-term market assumptions suggest why this matters: for an average Nest member, a portfolio with illiquids, such as private equity and infrastructure, is projected to create a retirement pot around £15,000 bigger – a 6.7% uplift – compared to a portfolio relying solely on public markets. While illustrative, it underscores why unlocking these opportunities is so important for master trusts.
Global experience also emphasise why size and scale matter.
Take Australia's superannuation sector: it has consolidated into around 30 to 40 major funds that dominate the retirement landscape, managing approximately A$2.89 trillion in assets as of March 2025. Crucially, around A$400bn (£194bn), or around 13-14%, is allocated to unlisted assets like property, infrastructure, private credit, and private equity, which schemes over there call the "ballast in the boat", helping to insulate member returns from the impacts of recent listed market stress.
In Canada, pension giants have pooled assets to achieve global scale, enabling direct investment in infrastructure, real estate, and private equity. These funds consistently deliver strong long-term returns while reducing costs through internal management and superior deal access. The US too has seen big pension schemes use their scale to negotiate better terms, diversify into private markets and access deals typically out of reach for smaller players.
From building scale in the workplace pensions industry to stimulating investments in UK growth and ultimately delivering better outcomes for savers, the Bill carries a vision that Nest strongly believes in.
Key areas to strengthen
With that in mind, there are two key areas the Bill could be strengthened to further unlock innovation and spur UK growth:
Firstly, broaden the fiduciary duty. We support the proposal to expand fiduciary duty to consider wider financially material factors while maintaining trustees' discretion, put forward by responsible investment charity ShareAction. This would empower pension schemes, giving them greater confidence to invest in UK projects and help foster a more ambitious pensions industry that best serves savers and communities.
Second, extend the Bill's scope. Some of its most important provisions – like value-for-money standards – should apply across the pensions landscape. Workplace pensions should be the starting point, with equivalent standards also applying to personal pensions to ensure there is no two-tier approach. Every pension saver deserves the same protections and quality.
The Pension Schemes Bill is a solid move in the right direction. With a few tweaks, it could do more than just modernise pensions – but turn them into an engine for investment, innovation and long-term prosperity.
Ian Cornelius is chief executive of Nest Corporation
