NEST Corp., London, issued an RFP for an active U.K. corporate bond manager to run a component of the target-date options within the new national defined contribution system, spokeswoman Heather Tilston said.
The strategy will be used within the early part of the consolidation phase, which aims to manage risk as growth assets are transitioned to retirement income through the purchase of an annuity. Other fund options that may incorporate active corporate bond investments include the NEST pre-retirement fund, which is designed for members who begin saving with NEST a few years before retirement.
“NEST's research suggests that currently, the best portfolio to track retirement income products is (U.K. government bonds) split with corporate bonds,” Mark Fawcett, chief investment officer of NEST, said in a news release. “Our research on the performance of active managers, corroborated by external research, shows that a significant number of active corporate bond fund managers have historically outperformed corporate bond benchmarks.”
Proposals are due Dec. 13, and an appointment is expected to be announced in the spring. Further information can be obtained from NEST's consultant, Aon Hewitt, or www.nestpensions.org.uk.
Automatic enrollment in the National Employment Savings Trust, managed by NEST Corp., will begin in October 2012; about 40 employers are already using NEST's DC platform, Ms. Tilston said.