The United Kingdom's nationwide defined contribution plan designed for lower-income workers is growing at a rapid pace just nine months after it began accepting members.
NEST Corp., London, announced on July 16 that assets in the National Employment Savings Trust totaled £11.1 million ($16.88 million) as of June 30, nearly triple the assets reported the previous quarter.
As of June 30, the trust announced it had 275,000 members, up from 81,255 members at the end of the first quarter, with more than 900 participating employers, up from 347 three months earlier.
Among the large U.K. employers with which NEST is working are McDonald's, Random House Group and Travelodge, according to spokeswoman Annie Bruzzone.
The trust began accepting participants in October and began with an original 849 and £500,000 in assets. It is estimated to grow to as much as £200 billion by 2040.
Also on July 16, NEST Corp., which was established in 2008 to set up and manage the trust, released its corporate annual report and the annual report for the trust for the fiscal year ended March 31.
The NEST Higher Risk Fund had the best performance for the fiscal year, at 15.6%, followed by the NEST Sharia Fund at 14.5% and the NEST 2040 Retirement Fund at 13.6%.
The returns for the rest of the funds were: NEST Ethical Fund at 13.4%; NEST 2055 Retirement Fund at 12.7%; NEST 2021 Retirement Fund at 12.2%; NEST Pre-Retirement Fund at 8.1%; and NEST Lower Growth Fund at 0.4%.
“I am proud of what we've achieved this year — we have faced significant challenges and hurdles but have delivered for members and employers. We won't always get everything completely right, but we continue to learn and evolve our services to ensure they meet the needs of employers and members,” said Tim Jones, CEO of NEST Corp., in a news release.
One of the challenges NEST faced this past year was a fraud that cost the corporation £1.4 million “involving the diversion of a supplier payment,” according to the annual report. No other information regarding the fraud was available.
In July, NEST added the Managed Property Fund (U.K.), which invests directly in commercial property in the U.K., and the Global Real Estate Equity Index Fund, which invests in real estate company shares around the world, both managed by Legal & General Investment Management. Both are underlying investments in NEST's target-date funds.
According to the annual report, as of March 31 the actual asset allocation of total investments was: 42.7% developed markets equities, 12.2% money market instruments, 11.1% U.K. investment-grade fixed income, 8.9% U.K. index-linked gilts, 5.7% U.K. investment-grade fixed income (global), 4.9% inflation-linked fixed income (ex-U.K.), 3.5% U.K. gilts, 3% emerging markets debt, 2.5% high-yield fixed income, 2.3% property, 1.6% developed small-cap equities, 1.4% emerging markets equities and 0.2% developed sovereign debt (ex-U.K.).