Personal Accounts Delivery Authority

Investment

Designing an investment approach

Overview

In May 2009 PADA published a discussion paper to support the public consultation process on designing an investment approach for NEST (National Employment Savings Trust).

The formal consultation period ran for 13 weeks from 7 May to 7 August 2009 and the support from stakeholders marked an unprecedented level of engagement and debate. We received 67 responses to the discussion paper and more than 100 stakeholder representatives attended one of the series of 10 roundtable discussions we held throughout the consultation period.

We gathered the opinions of a broad range of stakeholders, both national and international, throughout the consultation - including pension experts, financial intermediaries, representatives from investment organisations, academics, unions and employer organisations, consumer groups and existing trustees.

The key findings from the consultation on the investment approach were published on 25 November 2009. A number of areas where we sought stakeholders' views revealed an emerging consensus on certain issues.

We are extremely grateful to all who either submitted a formal response, took time out to attend one of our roundtable discussions, or fed into our consultation through other channels.

While the trustee corporation will make the final decisions, stakeholders' responses to the consultation mark a significant contribution to PADA's continued work on designing an investment approach that best suits the scheme's members.

Next steps

PADA's role is to develop a detailed and evidence-based set of recommendations for the trustee corporation. With this in mind, we will continue to engage with stakeholders on key areas of scheme design, in particular, where the responses to the consultation revealed there was little consensus among stakeholders. We will also continue to carry out research into areas that the consultation indicated the need for further investigation.

Background to the investment consultation

• In autumn 2008 PADA commissioned research to explore the existing evidence on individuals' investment behaviour and their attitudes to taking risks when making choices about investing their pension fund, Individual investment behaviour: a brief review of research (PDF, 148kb).
• In January 2009 PADA held a one-day seminar for stakeholders on the issues of Responsible Investment and Socially Responsible Investment.
• PADA's research, plus the feedback from the Responsible Investment seminar, were fed into the investment discussion paper.
• The formal investment consultation period ran for 13 weeks from 7 May to 7 August 2009.
• From June to September 2009, PADA held roundtable discussions with a variety of stakeholders - including consumer groups, trade bodies and representatives from the investment industry in order to gather a broad range of opinions.
• In November 2009, PADA published the key findings of its consultation on the investment approach.
• To assist in the drafting of the investment discussion paper, PADA drew on work commissioned by the DWP that looked at how institutional fund managers viewed responsible investment. The final report produced by Paul Cox from Exeter University is available to view here. Responsible Investment in Fund Management: It Works, But When? (PDF 312kb): Paul Cox, Xfi Centre for Finance and Investment, University of Exeter Business School 2009.
• PADA is continuing to engage with stakeholders on designing the investment approach for NEST.

Find more information on PADA's consultations.

If you have questions or feedback on designing the investment approach for NEST, please contact pada.investmentconsultation@dwp.gsi.gov.uk.