NEST pension scheme names Sharia, ethical managers

LONDON Mon Apr 11, 2011 4:14am EDT

LONDON (Reuters) - Britain's new national pension scheme for workers whose employers do not run their own plans has appointed HSBC and F&C to run the Islamic and ethical portfolios respectively.

The National Employment Savings Trust, expected to become Britain's largest pension fund with up to 100 billion pounds in total assets by 2030, will offer the two portfolios, among others, when it launches next year.

Contributions of members choosing Islamic fund management will be paid into the HSBC Life Amanah Pension Fund, run by the banking group's Islamic finance unit. Such investments would shun association with areas forbidden by Islam, such as alcohol, weapons, pornography, gambling and mainstream financial services because they charge interest, also seen as sinful.

"The NEST Sharia fund will be 100 percent invested in this fund," NEST's head of investment Mark Fawcett told Reuters.

The contributions of those who want to invest in a portfolio which takes into account issues such as employment practices, human rights and the environment, will be funnelled into F&C's Stewardship International Fund.

"There are positive focuses that align very well with what we know about our members; protecting human rights, good employment practices, positive impact on local communities," Fawcett said, adding he expected the option to be reasonably popular.

NEST will charge members, potentially millions of workers with no corporate pension, the same fee as the default option, which is expected to attract around 80 percent of inflows given most members were expected to shy away from making specific investment choices.

The scheme has already appointed UBS, BlackRock and State Street to manage global equity, bond, cash and British sovereign debt.

NEST is setting up a pre-retirement fund for members who want to save in the short term to buy insurance. This is likely to invest in money markets, gilts and corporate bonds, Fawcett said, adding a request for tender would come later this year.

(Editing by Dan Lalor)

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