The UK’s largest defined contribution (DC) master trust has appointed pension insurance specialist Rothesay to co-design a bulk deferred annuity as part of its planned post-retirement offering.
Nest, which has more than £60bn in assets under management and 14 million members, has been working on its lifelong retirement income proposition for some time, and last year Pensions Expert reported that bulk annuities would feature in its design.
In a statement published today (28 January), Nest said the bulk deferred annuity concept was “a market first in the UK”. Once implemented, Nest will purchase bulk annuities for cohorts of retirees to pool longevity risk and give older savers a guaranteed income for life, based on their Nest pension pots.
The master trust said the insurance approach would be “blended” with invested elements with the aim of providing a higher income for members than “traditional approaches”, while also helping ensure that their money does not run out.
“Our solution will aim to provide a lifelong income solution to Nest’s members and provide certainty that they will not run out of money in retirement.”
Ian Cornelius, Nest
Nest said it will set members’ income levels and the investment strategy to ensure that pension pots are sustainable, while the bulk annuity element will “provide certainty that members won’t run out of money in retirement”. Members will also retain some flexibility to allow them to change their minds about how to draw their pension.
Meanwhile, Rothesay said its work with Nest would allow it to provide similar services to other DC pension schemes.
Nest boss hails ‘transformational’ development
Nest CEO Ian Cornelius said: “We know our members are finding it hard to manage the multiple risks they face in retirement on their own. It’s our role to do everything we can to help them achieve great outcomes in retirement…
“We want to help build financial peace of mind for all UK savers. Our solution will aim to provide a lifelong income solution to Nest’s members and provide certainty that they will not run out of money in retirement.
“Our members will know that Nest is helping them every step of the way as they make the transition from working life to retirement, where they are faced with some of the most complex financial decisions of their lives. This partnership with Rothesay has the potential to be transformational not only for our members, but all DC savers.”
Graham Butcher, chief financial officer at Rothesay, added: “This is an important step forward in transforming retirement outcomes for DC members, and we are delighted to have been selected to partner with Nest in this groundbreaking initiative. It has been a hugely collaborative process so far, and we are excited to continue our partnership to secure the long-term future for millions of DC savers in the UK.”
The Pension Schemes Bill, currently being scrutinised in the House of Lords, contains provisions that will require DC pension schemes to provide a default retirement option for members.
The proposal is aimed at ensuring DC savers are supported at retirement. Recent research from Fidelity International and the National Innovation Centre for Ageing found that two in five people aged 50 and over worldwide expect their savings to last at least 10 years less than their life expectancy. This figure was 35% in the UK.
TPT Retirement Solutions announced its own ”income for life” offering last year, aimed at DC schemes and savers. Other major DC providers are working on their own approaches.
Nest to tap into bulk annuity market to support post-retirement proposition
Gareth Turner, head of strategic investment projects at Nest, explained the master trust’s decumulation blueprint last year, as Pensions Expert reported in June. He explained Nest’s plans to incorporate bulk annuities and develop a flexible drawdown facility – something Nest has been lobbying for over the past few years. Read the full article from June 2025.
Nest is the pension provider for DG Publishing, Pensions Expert’s parent company.
