Standard Life has launched Future Opportunities, a new default pension solution designed to improve member outcomes by increasing access to private markets.
The strategy builds on its existing Sustainable Multi Asset approach and gives employers the option to retain a lifestyle structure while adding exposure to a wider range of assets.
According to Standard Life, Future Opportunities will slowly introduce private market investments alongside public assets, with a long-term allocation of around 25 per cent expected to improve returns and diversification.
The solution includes oversight of asset allocation, investment quality, pace of investment and member outcomes as well as a transparent fee structure. This includes a variable annual management charge and a performance fee that applies only when return targets are met.
Standard Life will use the expertise of Future Growth Capital to support its private markets strategy, with a focus on investment selection, portfolio construction and ongoing management.
Standard Life workplace investment development lead Alasdair Birrell says: “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. Though currently unfamiliar to employers and 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.
“It’s going to be a multi-year journey, and we’ll grow the allocation gradually and prudently to ensure outcomes are always prioritised, while continually building trust and familiarity in private assets among our clients and members. Under a variable charging structure members only pay for the private allocation they have and not the one we’re targeting long term.”
Standard Life workplace managing director Gail Izat says: “Future Opportunities builds on our strong track record of continually developing our proposition to improve outcomes for members. The proven blueprint of our Sustainable Multi Asset solution combined with a significant tilt to private markets provides more choice to employers and the prospect of higher returns to members.”
Standard Life chief executive Andy Briggs says: “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.
“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.”