Illiquid and private market assets can improve DC member outcomes when used thoughtfully, with careful selection and a clear focus on member interests.
That was the key takeaway from a panel discussion at the Corporate Adviser Master Trust Conference.
Barnett Waddingham partner Martin Willis said that while members can be nervous about volatility, a modest allocation can help drive better long-term returns. He said: “People get freaked out by volatility, but private markets can drive positive returns.”
He added that any allocation must stay firmly “in members’ interests” so that private markets “do not become the tail wagging the dog.”
Aegon director DC clients & head of Master Trust Antonia Balaam said the growing use of private equity, private credit and protected equities has finally pushed default strategies forward. She explained that protected equity “shaves off the highest highs and lowest lows,” creating a smoother path into and through drawdown. She also stressed the importance of simplicity when adding new asset classes.
SEI defined contribution and solutions managing director Steve Charlton cautioned that illiquids only add value if schemes apply strict selection and governance. He said leading schemes succeed because they are “more selective about what they buy, why they buy it and how they manage it,” ensuring that net-of-fees value is delivered rather than assumed.
Panellist noted that recent operational improvements across platforms and custodians have made private assets more accessible for DC schemes, opening up options that simply were not realistic five years ago.
They agreed that illiquid assets offer a rare opportunity to make investment stories feel real. Balaam said members rarely feel inspired by “gilts and trackers,” but they do connect with tangible assets such as infrastructure, forestry and healthcare innovation. She cited areas like regenerative medicine as examples where members can see real-world impact.
Charlton described future engagement tools that could link portfolios to physical locations.
Willis supported stronger storytelling but warned against creating unnecessary complexity. Members don’t need gimmicks or multiple defaults, he said they need clarity: “let’s not patronise members, but let’s keep things simple.”
The panel supported the aims of the Value for Money framework but cautioned that it could lead to unintended consequences. Balaam warned that peer-group traffic-light ratings could skew behaviour, noting that “someone is always at the bottom of the table,” which might drive consolidation at the expense of member benefit and stifle innovation.
Charlton cautioned that schemes might lean on strong ratings in low-impact areas while overlooking weak investment performance. He also argued that trustees, not ministers, should determine whether schemes deliver value, noting that political cycles are too short for pension outcomes.
Speakers saw targeted support as a major opportunity to improve member decisions. Willis said this could help more people contribute appropriately and address adequacy challenges by “nudging people who could pay more to pay more.”
Balaam said providers are ready to deliver this guidance, but need clarity on liability. She said that with good design, pension conversations could feel more like a helpful “down-the-pub conversation” that gives people confidence.
Charlton added that most members do not want formal advice; they want reassurance, which is why many schemes are now using coaches to guide people to the right choices.
The panel highlighted rapid AI advances, with tasks that once took “a whole weekend” now done in 45 minutes via automated, safeguarded cloud processes.
Balaam showcased advances in AI video communications that replicate real presenters and allow true personalisation at scale. Willis said this innovation could also support new retirement solutions such as dynamic drawdown strategies that bank gains or adjust for market shifts automatically.
The panellist agreed that the long-term opportunity is a more holistic financial environment that links pensions, savings, debt and health in a coherent member journey.
