Mansion House Compact: Spotlight on Aegon

According to Niall Aitken, head of retail investment proposition at Aegon, some could be “surprised” by Aegon’s involvement in the compact.

Aegon is ”different to some of the other signatories”, he said, pointing out that the majority of the signatories are “master-trust only”, whereas Aagon also has a “large back book of contract-based pensions”.

But the timing of the Mansion House Compact was “very fortunate” as Aegon started to work internally around the same time on what is the longer-term strategy for defined contribution (DC) defaults across the board.

He said: “That prompted us to investigate broader diversification and better utilise the benefits of scale to deliver better outcomes for members.”

And because Aegon had done “the initial prep-work in advance of the compact”, it got involved when the “opportunity came along” as it was able to “shape it to suit our agenda”.

The plan is all about “credible, considered and careful” first steps, Aitken said.

He pointed out that Aegon already dipped its toes into the private market. “We are a large insurer that existed for a long time, and we have much experience dealing with commercial property and illiquid funds.”

He added that Aegon has operational processes and structures in place to do this, and it is used to do things that aren’t dealt or valued daily.

Private markets 

And while the Mansion House Agenda specifically calls for allocating 5% of schemes’ default funds to UK private equity by 2030, Aitken said that the way Aegon looks at the Mansion House Agenda is broader than just increasing private equity investment.

“We are very much focused on broader private market access to start with, and a component of that will be private equity,” he said.

“We think that better outcomes can be achieved across a range of those private market assets, whether that’s private credit, infrastructure, real estate, private equity – all can be added for long-term outcomes.”

But as part of the vehicles that Aegon creates, Aitken noted there will be private equity, and a “very broad flavour of it”.

In order to get there, Aitken said Aegon will partner with the “right” asset manager that is “completely aligned to us seeking to help our customers live their best life”.

Aegon expects to reach 10-20% of private markets exposure in the next couple of years, with private markets building over four or five years to 5%, he continued.

Timeline

Aitken admitted that Aegon has been “quieter” than other signatories on the timeline for private markets allocation.

He said that this is “easier” for master trusts that already have some exposure and are “starting to talk about what they are doing” to build out other areas.

“We all benefit from the way the market is pulling together. Lots of us want to get involved in this, and we can leverage that to better outcomes for our customers.”

But in terms of its own timeline, Aitken said that Aegon’s internal governance is “complicated” because “massive trust boards, internal sign offs, group sign offs, and operational processes are complex”.

He added: “But we had our sign offs to proceed, we’ve designed our strategy, we got our fund partners, and we are working through building the vehicles that we need to progress.”

Aitken hopes that this time next year he will have “something to show” but he added it takes time and in the meantime it’s all about “careful, slow and considered” steps.

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