Firms which may have a more paternalistic or “avuncular” approach to its retirement scheme members may be more likely to take up the adoption of collective defined contribution, according to Rachel Harris, head of UK institutional at Schroders.
Harris has been at Schroders since 2022, and prior to her most recent appointment earlier this year was head of defined contribution and retirement solutions. She is also a member of the board of trustees at the London Library Pension Fund.
“CDC will philosophically align quite well with what some companies are trying to do. This is namely those companies that have a more paternalistic approach, more avuncular approach, as well as potentially those companies which have smaller pots. Royal Mail would be a good example of this. However I would not expect, for example, financial services companies to go for something like CDC”, says Harris.
Multi-employer CDC has become possible in the UK since July, and the first single employer CDC in the UK was adopted by Royal Mail in 2024.
Schroders is also an active management house, has total assets under management of £868 billion as of June.
As to whether ongoing macroeconomic and geopolitical uncertainties is drawing institutional assets away from passive international equities towards active management once more, Harris seeks to paint a more balanced picture.
“Is there a full-on wholesale pivot (to active), probably not. But we are starting to see some pickup in interest from an active standpoint. we have actually seen some interest in active equity, with such mandates this year being adopted by insurance funds.
“Whether this is due to the current macro and geopolitical backdrop, or whether it’s due to some acceptance of the fact that long-term returns are potentially better from an active standpoint, or whether it’s a confluence of those two events, I wouldn’t want to say, but we are definitely seeing a pick up in in interest in active per se and potentially active equities.”
On private markets, Harris noted that while there is continued interest in UK private markets from institutional clients, opposition to mandation in investing in such assets (as shown in legislation passed in the Pension Schemes Act) was almost universal in the sector, including at Schroders itself.
