Standard Life has launched a new alternatives-focused pension default solution, named Future Opportunities, which will invest in assets including private debt and real assets.
According to the British pension provider, the Future Opportunities default strategy will target around a 25 per cent allocation to private markets over the long term, investing in private equity, private debt, real assets and venture capital.
Standard Life, which manages £317bn in assets, said the private markets exposure of the default fund will be introduced gradually, with investments initially sitting in public markets before alternative assets are deployed.
The allocation will evolve depending on market conditions and investment assumptions, the firm added.
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“Future Opportunities is a strong addition to our workplace offering as private market investing becomes a key component in the evolution of pension saving in the UK,” said Alasdair Birrell, workplace investment development lead at Standard Life. “Though currently unfamiliar to employers and defined contribution (DC) members, we anticipate strong demand among those seeking the potential for better returns and added diversification as we pave the way to make investing in private markets mainstream for millions of pensions savers.”
The firm said the default strategy will use Future Growth Capital to manage its private market allocations, including direct deal underwriting and portfolio construction.
The solution will also introduce a transparent charging model, including a variable annual management charge and a performance fee for private markets via a long-term asset fund.
The move comes as Standard Life was one of the original signatories of the Mansion House Compact and one of 17 pension providers that signed the Mansion House Accord, a voluntary commitment to invest at least 10 per cent of their default DC funds into private markets by 2030.
Standard Life said the Future Opportunities strategy builds on its £39bn Sustainable Multi Asset default offering.
“For too long, UK pension savers have received lower returns than their counterparts in Australia and Canada, partly because the UK allocated much less capital to private markets assets than other countries,” said Andy Briggs, chief executive, Standard Life. “Future Opportunities is a clear demonstration of how we are focused on helping our customers achieve better outcomes and greater financial security in later life.”
Standard Life said it has incorporated significant oversight to monitor the solution and support the private markets strategy. This includes a series of reviews covering strategic asset allocation, asset quality, the pace of deployment and the impact on net member outcomes, as well as fee transparency.
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