Nelson, after stealing money from the couple, had stolen a car and fled to Waitara where he was later arrested.
He pleaded guilty to murder but was not sentenced to life imprisonment.
Justice Paul Heath said that in the light of Nelson's culpability and having regard to his age, brain development and personal circumstances it would be "manifestly unjust" to sentence him to life behind bars.
Instead, he sentenced Nelson to a finite term of 18 years imprisonment, with no minimum non-parole period.
Nelson became eligible for parole in April 2018 but told the board he "did not seek it" because he had "more work to do" before release was a "realistic possibility".
At the time the young killer acknowledged he needed more help and needed to gain insight into his offending, which he could not explain.
Parole Board chair Sir Ron Young said the latest psychological report presented to the board about Nelson noted he was "somewhat over-confident, about his ability to manage on the outside after release".
Nelson had proposed to be released to live with a man who had supported and visited him throughout his time in prison.
But Nelson had never lived with the man, whose name was withheld in the Parole Board decision.
"In that sense [Nelson] has never had a domestic relationship with him," said Sir Ron.
"We express our concern about whether or not that is the wisest way in which he could begin any release from prison."
Another factor that worried the board was Nelson's current relationship with an older woman who started writing to him in jail.
"Mr Nelson mentioned a woman who he says is his partner," said Sir Ron.
"The woman is 15 years older than Mr Nelson.
"We understand he had initially had phone contact and then from time to time she has visited him."
The woman has two young children and the board heard that Nelson had spoken to his psychologist about "parenting those children in the future".
"Given Mr Nelson is only 21, has spent all of his teenage years, save the very first period, in prison and is proposing parenting two young children in a partnership with a woman 15 years older than him, has concerning elements," said Sir Ron.
It was also revealed that Nelson had been caught with contraband and drugs in 2019.
The psychological report presented to the board stated that Nelson had disclosed that he had "acted improperly in relation to the use of a phone" along with "drugs and bringing contraband into prison".
"We questioned Mr Nelson about this," said Sir Ron.
"He said the improper conduct had nothing to do with drugs. Another prisoner had a cell phone.
"He did not know how to use it. He wanted to use it to transfer money and contact people in prison."
Nelson claimed he showed the inmate how to transfer money and make contact with others.
As a reward, he was given clothes and access to the phone to call his "partner".
"Obviously, that was seriously unlawful conduct," Sir Ron stated.
"We pointed out to Mr Nelson his actions could constitute a crime given the circumstances relating to the transfer of money was obviously suspicious."
The board heard that Nelson had also made positive progress.
He is currently housed in a unit situated just outside Hawkes Bay prison that focuses on teaching inmates coping skills for life beyond jail.
"He has overall, done very well there," said the Parole Board decision.
"Recently, Mr Nelson commenced release to work… He says he currently enjoys it and is
doing well."
But that was not enough to satisfy the board he could be released.
"Mr Nelson had a release plan and a plan for the future. We expressed our concern to him about his plan," said Sir Ron.
"It is here that we return to the psychologist's comment about Mr Nelson being overly confident about how he might manage on the outside."
The board encouraged Nelson to "concentrate on two things" before they could think about letting him leave prison.
"Firstly, his release to work - where he can illustrate that he can cope in a variety of circumstances in a community that he has not been in as an adult," said Sir Ron.
"Secondly, that he reconsiders his release plans and thinks about some supported accommodation initially so that he can develop a relationship with [the man he wants to stay with] before consideration is given to living with them.
"In the meantime, he remains an undue risk."
Nelson will see the Parole Board again in December this year.
