On the go: The loan from the Department for Work and Pensions to Nest increased by 66 per cent in 2020-21, as the government-backed master trust saw a rise in members and assets under management.
According to the DWP’s annual report, published on July 16, Nest received £106m from the government during the past fiscal year, compared with £64m in 2019-20.
Set up as part of the rollout of auto-enrolment, Nest has a public service obligation to accept any employer willing to comply with its requirements in this area.
To be able to cover its operations until it has enough scale to be self-sufficient, the master trust receives an annual loan from the DWP that now stands at £884m, which compares with £778m in 2019-20.
According to Nest’s business plan, the master trust is expecting to be able to cover its operating costs from scheme member charges from 2026 onwards, at which point the estimated borrowings will be £1.2bn.
The master trust aims to have repaid its loan from the UK government by 2039.
The increase in the government loan is due to the growth in Nest’s scheme membership, from 9.1m in March 2020 to 9.9m in March 2021, and its assets under management, which now stands at £17.6bn, a hike of £7.7bn in the same time period.
Richard Lockwood, Nest’s chief financial officer, said: “Nest is being initially funded by a loan provided by the government for the purposes of setting up and administering the scheme.
“This was to ensure a provider was in place so auto-enrolment could be a success from the beginning and could continue to be adequately funded as more people saved more into their pensions.
“The latest loan forecast has Nest on track to pay the loan in full within the original forecast range.”
