Cushon claims to have launched the largest private markets allocation in the UK master trust sector.
The £750m (€888m) defined contribution (DC) multi-employer pension scheme is introducing an investment strategy with a 15% allocation to private markets, including sustainable infrastructure.
The scheme also said the allocation is “the first in the DC sector to deliver impact across 100% of the portfolio”.
The new strategy comprises listed bonds and equities and a multi-asset private markets portfolio, the latter specified as being for investment in developed and emerging markets.
Schroders Capital, the private markets division of Schroders, has been appointed to manage a private assets portfolio, with Cushon saying this was to manage investments in “high impact projects including sustainable infrastructure, clean tech, natural capital, financial inclusion and climate insurance, as well as social and affordable housing”.
Lombard Odier Investment Managers is to manage a listed bonds “focusing on the most promising companies that are accelerating towards net zero with the aim of supporting that transition”.
Wellington, meanwhile, has been appointed to manage listed social impact bonds, and listed equities will be managed by Macquarie to a custom-designed climate and social impact index created by Solactive.
“The changes announced to our investment strategy demonstrate our commitment to sustainability and responsible investment which we believe supports better long-term financial outcomes for our members,” said Roger Mattingly, chair of the Cushon Master Trust.
“We have spent considerable time undertaking due diligence of the investments and fund managers, as well as negotiating costs to ensure that we can include private market investments well within the confines of the charge cap,” he added. “We are certain the new investment strategy will deliver excellent retirement outcomes for our members.”
The new strategy will launch early next year. Cushon indicated the aim was to further improve engagement levels and ultimately member outcomes.
Ben Pollard, founder and CEO of Cushon, said: “We need a new approach that places saver engagement at the heart of the pensions industry. That’s why a big focus of our new investment strategy includes, for the first time for the defined contributions market, connecting savers with investments in projects and companies that they can feel proud of and engage with.”
In January, Cushon launched what it said was the world’s first “net zero now” pension, using a mixture of green investments together with high quality carbon offsets. Today it said it had reduced financed carbon emissions from 80% of the UK average to below 50%, thereby reducing its reliance on offsetting.
Cushon’s announcement of its new investment strategy comes as the Financial Conduct Authority today unveiled rules for a new type of fund, the Long-Term Asset Fund (LTAF), to support investment in assets like infrastructure and private equity by defined contribution schemes with interest in such exposure.