Master trust provider Scottish Widows has added two private markets funds to its workplace pensions investment strategies, as defined contribution (DC) pension schemes continue to increase their exposure to unlisted assets.
The company announced today (4 February) that it had added two long-term asset funds (LTAFs) to its portfolio, including a credit-focused fund and a broad private markets strategy.
The investments form part of the portfolio for two of Scottish Widows’ Lifetime Investment offerings, “Plus” and “Extra”. The former now has an 11% allocation to private markets through the new LTAFs, while Extra has allocated 23%.
“We believe investing in private markets increases diversification and can provide access to long-term growth opportunities to support retirement incomes.”
Graeme Bold, Scottish Widows
Scottish Widows launched Lifetime Investment last year after overhauling its master trust’s investment approach. The default fund, Lifetime Investment, does not have private markets exposure.
The CG SW Growth LTAF, managed by Aberdeen Investments, aims to provide savers in the ‘growth’ phase with exposure to assets including private equity, venture capital, infrastructure equity and private credit.
Meanwhile, the CG SW Diversified Credit LTAF is run by BNP Paribas Asset Management and is focused on private credit, including infrastructure lending, real estate, and lending to small businesses.
New managers can be added to the LTAFs as the master trust’s approach evolves, Scottish Widows said. It also plans to make use of the origination and deployment capabilities of its parent company, Lloyds Banking Group.
Graeme Bold, managing director for pensions and retirement at Scottish Widows, said: “Bringing private markets into workplace pensions is a major milestone in helping customers make the most of their retirement savings. We believe investing in private markets increases diversification and can provide access to long-term growth opportunities to support retirement incomes.”
Chief investment officer Kevin Doran added: “The portfolios will include investments in areas driving energy transition and adaptation, delivering benefits to members in their immediate environment, alongside future financial returns.”
Separately, research from Schroders and Longview Networks indicates that more than two-thirds (69%) of DC pension schemes plan to use LTAFs to access private markets.
The research, published this week, also found that three-quarters (74%) of respondents expect to increase their private market allocations in growth phase investment strategies. More than half (53%) reported increasing private equity allocations at their most recent investment review.
