UK public contract notice — National Employment Savings Trust (NEST)  (Mar 2024)

Nest Invest was set up as FCA authorised subsidiary of Nest Corporation in 2020. The FCA designation is that of an Occupational Pension Scheme (OPS) firm. Nest Invest’s regulatory permissions are to advise Nest on its investment strategy and the suitability of its existing and new external fund managers, as well as ensuring Nest’s members’ money is invested in accordance with the investment strategy and Statement of Investment Principles. However, the permissions Nest Invest has would permit the potential to do more in the direct investing space if Nest Corporation required it.

Nest is on a path to becoming one of the largest pensions schemes in the UK. Whilst Nest holds £35bn today, that figure will grow to around £100bn or higher by the end of the decade. Each year Nest receives around £6 billion in new contributions from members. The growth trajectory means that the operating model for Nest Invest will need to evolve over the next ten years.

Nest currently insources strategic asset allocation, portfolio construction, responsible investing, manager selection and manager monitoring. Fund management, the implementation of investment decisions, and fund custody/administration are outsourced. However, as Nest grows the make/buy boundary is likely to change in terms of the investment process. In particular, we may look to insource elements of fund management activity in some asset classes where that is consistent with members’ interests.