Proposals to allow the National Employment Savings Trust to enter the drawdown market with a low-cost option have raised concerns amongst corporate advisers. By Gill Wadsworth.
In a poll of delegates at the Corporate Adviser Summit, more than half (53%) said Nest should be legally prevented from offering drawdown to all retirees, with just under half (47%) happy for the government-backed master trust to offer at retirement solutions.
Advisers were more comfortable with Nest offering drawdown solely to its own customers. 70 per cent said the trust should be allowed to offer drawdown while just 30% were against.
The response follows a government consultation in July which set out proposals to allow Nest to expand into the post retirement market rather than simply offer workplace pensions for auto-enrolled members.
However Nest competitor The People’s Pension head of policy and market engagement Darren Philp questioned whether allowing Nest unfettered access was dangerous for the wider master trust market.
Philp said: “They only reason Nest would develop sophisticated drawdown solutions is if it is trying to disrupt the market. If you’ve got a subsidised government loan and the capital behind that is leading Nest to go where there isn’t already a market failure, I think it’s dangerous.”
Aviva technical reform manager Dale Critchley agreed that allowing Nest to market drawdown was unwelcome.
Critchley said: “When we talk about what we do to prevent master trust failure apparently government’s idea is to [allow Nest to] expand into drawdown on the back of a government loan and we don’t think that’s fair.”