Why did Nest switch fund without asking?

P.S. writes: Nest Pensions switched my pension savings out of the Sharia Fund I had chosen and into its own Post Retirement Fund, and then some days later switched me back again. All this was done without my permission and if I had not looked at the relevant investment page online by mistake, I would never have been aware of it. I lost money through this unauthorised switch and I notified Nest in July but it has been giving me the runaround.

THE emails you sent me show that you tried to sort this out by phone and on Nest’s online chat service, but you got nowhere after being asked when you switched funds, while the whole point was that you made no switches at all.

So, on July 10 you put your complaint and your questions to Nest by email and were told that, ‘This issue should be resolved within seven working days.’

It was not resolved, of course, but the flow of emails continued, with assurances that an ‘incident team’ was actively investigating, while at the same time you were faced with ridiculous questions including a request that you should tell Nest when the fund switches took place, despite the fact that it was Nest itself that made the switches.

By the time you contacted me, we were into September and you had still received no explanation from Nest, which is a public body set up by the Government more than a decade ago to provide workplace pension schemes after employers had become legally obliged to make most employees save for retirement.

Nest’s near-silence made you wonder whether there was some kind of systems problem, and that your own unauthorised fund changes were not an isolated error. And you were right. My own enquiries with Nest brought to light 90 pension savers who had been hit with similar changes to their investments.

The explanation is that when Nest savers approach their expected retirement date, they are prompted to review their plans.

If they make no changes, then Nest itself switches them into a fund it runs, which should be more safe and stable.

This happens every June, but this year an update to Nest’s computer systems went wrong and members were switched out of their chosen investments even if they had tried to say they were happy as they were.

Nest soon realised things had gone badly wrong, so it moved all 90 savers back into their original investment funds.

However, the original error was followed by a second one. Nest has told me it wrote to affected members in July, but it admits that for no clear reason, you were never notified.

Out of the 90 Nest savers hit by the systems error, 31 actually gained from the replacement investment while 59 – including you – lost money. The 31 will be allowed to keep their gains, and Nest will top up the 59 losing accounts to put them back as they should be. Your own losses were £149, and a credit for this should now be shown in your account.

Robin Lewis, head of service delivery at Nest, said: ‘We have spoken with Mr S to explain what has happened and express our sincere apologies for the level of service he has received.’ The systems error is being corrected, and sensibly Nest will give it a dry run before letting it loose on savers’ real funds.