Pension and savings fintech Cushon has joined existing signatories of the UK’s Mansion House Compact committing to increasing investment in unlisted equities by 2030 to boost UK growth.
The Mansion House Compact is a voluntary expression of intent by defined contribution (DC) pension funds to allocate at least 5% of their default funds to unlisted equities by 2030.
It was introduced back in July by Jeremy Hunt, the chancellor of the exchequer, as part of his plans to unlock up to £75bn of additional investment from DC and Local Government Pension Schemes (LGPS) to help grow the UK economy and deliver benefits to savers.
Original signatories include: Aviva, Scottish Widows, Legal & General, Aegon, Phoenix, NEST, Smart Pension, M&G and Mercer. Then earlier this month, the compact saw Aon join as the tenth member.
Cushon, as the 11th member of the compact, allocates 15% of its existing default funds to private markets, including unlisted equities, infrastructure, real estate and natural capital. Of this 15% Cushon targets between 25% and 45% invested in unlisted equities, meaning its current total default fund target allocation to unlisted equities is between 3.75% and 6.75%.
Examples of Cushon’s private equity investments include Adler, a provider of solar power systems and e-charging infrastructure and Igloo, an insurtech enabling climate related micro-insurance at scale.
The Cushon Sustainable Investment Strategy, which took effect in summer 2022, saw the fintech allocate one of the largest proportions of its default fund to illiquid assets in the UK DC master trust sector. It said that it is a cornerstone in its mission to rapidly reduce the scope 1 and 2 CO2e emissions funded by the growth stage of the strategy.
It added that the strategy has already achieved a 64% reduction in scope 1 and 2 emissions compared to Cushon’s independently verified industry benchmark of 118tCO2e/$m invested. In October it announced its target to reach an 80% reduction by September 2030 – with a target footprint of 24tCO2e/$m invested.
Ben Pollard, founder and chief executive officer of Cushon, said that private market assets not only present opportunities for higher returns, they also build pensions to be proud of.
He added that by investing directly in real-world assets in the UK aligned to the values of Cushon members means the fintech can better engage members with their savings.
He explained: “When members can see, touch, and even taste, the good that their money is doing, they are more likely to pay attention to their pension which encourages increased contributions and better planning for later life.”
“We’re pleased to be signing the Mansion House Compact and encouraging the wider industry to include these valuable assets in their strategies,” he added.
Christopher Hayward, policy chair at City of London Corporation, said: “The UK has the largest pension market in Europe with £3trn of assets under management, but how this money is invested is limiting returns for savers. In Australia, comparable schemes invest 10 times more in private markets than UK schemes.”
He added that if the UK’s DC pensions industry were to allocate 5% of assets to unlisted equities, it could unlock £50bn of investment in high growth British companies by 2030.
Hunt said: “I am delighted that Cushon has become the 11th signatory of the Mansion House Compact. This adds yet more momentum to the government and industry’s collective mission to bolster retirement incomes for pension savers and turbocharge the growth of our most innovative companies.”
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