The 2040 Nest Retirement Date Fund, which currently represents the growth phase of the pension fund's default strategy, has delivered annualised returns, net of annual management charges, of 7.3 per cent over the past decade, outperforming its target return of 5.8 per cent.

In its 2022/23 annual report and accounts, which detailed the default fund's performance, Nest Corporation also showed that some 99 per cent of its now 12 million members are in the scheme's default investment strategy.

The fund’s membership grew from 11.1 million in March 2022 to 12 million in March 2023. The report says growth in membership, alongside high salary inflation within the UK labour market, enabled member contributions to out-perform expectations.

This meant that Nest was managing £29.6bn on behalf of 12 million members and 1.1 million employers by March 2023, compared with £24.4bn for 11.1 million members and 975,000 employers in March 2022.

In March 2023 Nest had £14.7bn (49.8 per cent) invested in its climate-aware equities strategies, up from £352m(12.6 per cent) invested in 2018.

Nest’s climate-aware strategies help to manage climate-related risk by reducing investment in the biggest greenhouse gas and carbon emitters and investing more in green technology, such as solar and wind farms.

“Nest has grown from a standing start to become one of the largest pension schemes in the UK — we take care of pensions for a third of the UK’s working population and we’re forecast to have £100bn assets under management by the end of the next decade," said Nest CEO Helen Dean.

“We have achieved this success by always taking decisions in the best interests of our members, with their long-term outcomes, as our utmost priority."

Dean also said that although Nest has taken the decision to end its partnership with administrator Atos BPS, it has managed to establish strong foundations with the company to help it deliver its transformation into a modern and fully digital fund.

“Our focus for the next 12-18 months is in developing an even greater purpose-led, customer centric organisation," added Dean.

"We are ready to deliver what is needed for the pensions dashboard project, and are now developing an app for our members. With this they will be able to have Nest in their pocket and enjoy a truly tailored and personalised experience of their pension pot."

The accounts also showed that Nest received £543m in new contributions for its members’ pots up until March 2023, compared with £477m last year. More than 6,900 new employers joined Nest, on average, each month in that same period, and the scheme now has 98.3 per cent of its members who have 50 or fewer employees.

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