UK’s new NEST fund talking with global funds on responsible investment

New national scheme seeking input on integrating RI

The UK’s planned low-cost workplace pension scheme, the National Employment Savings Trust Corp. (NEST), has held talks with international investors such as CalPERS, PGGM, ATP and VicSuper about integrating responsible investment.
RI understands the Personal Accounts Delivery Authority (PADA), the body responsible for launching NEST, is also using consulting firm Hewitt Associates to research how responsible investment is integrated by funds worldwide. This will help provide a template that NEST can use to formulate its own RI approach.
NEST is also likely to become a signatory to the UN Principles for Responsible Investment, according to UKSIF, the UK’s Sustainable Investment and Finance group. UN PRI executive director James Gifford presented at a PADA seminar last year and membership of the PRI has been raised in various consultation documents.
“We want to be an exemplar of good governance,” said a PADA spokesperson.
NEST officially comes into being on July 5 and no decisions can legally be taken until its trustees are in place, with investment strategy to be decided bythem later in the year. NEST will go live in April 2011 with a small group of voluntary companies, with higher volumes of investment due from October 2012.
The NEST project, formerly known as personal accounts, was set in train by the previous Labour government. However, the new coalition government is reviewing the wider auto-enrolment of workplace pensions of which NEST is a part, although it seems unlikely the scheme will be shelved.
Meanwhile, UKSIF says it expects responsible investment and ownership to become the norm for pension funds and insurers by 2020. It reckons public sector asset owners will be required by law to sign up to the UN PRI. It also expects pension funds to demand responsible investment as part of pension buyouts.
The comments come as the UKSIF is celebrating 10 years of responsible investment disclosure regulation for UK occupational pension funds.
UKSIF also announced that Martin Clarke, the Pension Protection Fund’s executive director of risk, is to take over from Steve Waygood as the organisation’s chairman.