Nest has unveiled a retirement panel of five providers to offer conventional and enhanced annuities to members that choose not to shop around on the open market.
Canada Life and Legal & General will be offering both conventional and enhanced retirement income products through the panel. Just Retirement and Partnership will be providing enhanced retirement income products, while Reliance Mutual will offer annuities specifically for those who smoke.
The panel is designed will make it easy for members to access products suitable for their needs and pot size at competitive rates.
As a condition of panel membership providers have given a commitment to provide retirement income products on pots from £1,500 upwards.
The contracts with providers run for 10 years.
Through Nest members will be able to request quotations, explore the income they would get and then buy from the panel or shop around if they want to.
Nest says it will provide information to members to help them decide what sort of retirement income product might be appropriate for their needs.
Tim Jones, Nest chief executive says: “Our panel will enable members to buy a retirement income product if this is appropriate to their needs, even if they have a small pot. This demonstrates how we’re designing Nest around our members, enabling many of those new to pension savings to be able to consider buying a retirement income for the first time. “Establishing a panel of high quality providers committed to Nest’s requirements means we can help members meet their aspirations.”
Tom McPhail, Pensions Income Choice Association chairman and Hargreaves Lansdown head of pensions policy says: “This looks like a reasonable compromise between making sure there was a decent choice of provider and product while taking into account not all would want to meet Nest’s terms,” said.
“Most importantly, no-one with a Nest pension will be forced to use the panel. It is not a substitute for shopping around but a backstop. Retirees still need to consider their options and alternative products such as drawdown or temporary annuities, or perhaps combining their Nest pot with another pension to generate a better income.
“This underlines the importance of getting that shopping around process working better before Nest becomes a reality. PICA’s work around the Pensions Passport will deliver a system that makes it easy for every pension investor reaching retirement to shop around as a matter of course and to see the alternatives options.”