Last year NEST published a consultation document which led to the development of a 3 tier retirement income strategy comprising a cash account, a trustee managed drawdown and a deferred annuity. NEST currently only offers its members the choice of a cash lump sum, or annuity purchase from a limited panel of insurance companies.
NEST owes the taxpayer around £500 million in start-up capital which was used to get the scheme off the ground. According to the National Audit Office, it is still a very long way from being able to pay off this debt. Bringing in extra revenue by offering a drawdown income solution might be a way to help NEST pay off its debt.
The call for evidence will last for 12 weeks.
Tom McPhail, Head of Retirement Policy at Lansdown, said:
“This call for evidence makes sense. The current restrictions on NEST risk leaving its members without the help and support some of them need to make the most of their retirement savings. With Pension Freedom the rules of the game changed, so the services offered by pension providers needed to change too. Commercial pension providers have all already adapted to reflect this; NEST now needs to do this too.”
“NEST has an opportunity to pioneer new ideas around the provision of drawdown for lower value and financially disengaged investors, as well as innovative solutions to the challenges of longevity insurance, through the use of deferred annuity type products.”
