Gail Izat: Future Opportunities builds on our strong track record of continually developing our proposition to improve outcomes for members
Standard Life has formally launched an alternative pension default solution focused on driving better member outcomes by embracing private markets.
The provider said the solution, Future Opportunities, was the latest evolution of its £39bn sustainable multi-asset default strategy and aimed to provide greater flexibility and optionality for employers who wanted to maintain the strengths of the existing lifestyle strategy but gain significant access to assets, such as private markets, that had the potential to deliver better outcomes.
Standard Life said Future Opportunities would be available at launch for selection as a default by new and existing businesses across trust-based products, including defined contribution (DC) master trust and own trust.
It said it had also begun collaborating with regulators to implement change that will enable fair access to private market solutions for members in contract-based products and is additionally planning options to provide the solution to the master trust self-select range.
Based on its current forward-looking assumptions, Standard Life said it believes that a long‑term private markets allocation of around 25% has the potential to enhance returns and improve diversification for customers.
It said its strategic asset allocation and portfolio management process will gradually introduce private assets on a prudent basis as opportunities arise, alongside initial public market investments – noting the solution would evolve on a dynamic basis, based on investments assumptions and prevailing market conditions to ensure members remain invested in a portfolio that reflects the most appropriate balance of risk and return at any point in time.
To enable its private markets strategy, Standard Life said it has incorporated significant oversight to closely monitor the solution – embedding a series of reviews across strategic asset allocation; asset quality, considered pace of deployment and impact on net member outcomes, and fee transparency via a clearly defined performance fee model.
Standard Life said its "clear and transparent charging structure" included an overall variable annual management charge (AMC) for private markets, and a specific long-term asset fund performance fee, designed to ensure members only pay more when performance targets are met.
Standard Life said the variable AMC at the overall default level ensures that members are only charged for the private assets that are in the solution today, not an anticipated allocation in the future, and facilitates a route for them to access quality growth opportunities that have only previously been available to professional investors.
The provider said Future Opportunities would draw on the private market expertise of Future Growth Capital – the dedicated private markets solutions investment manager launched by Standard Life's parent firm, Phoenix Group, and Schroders in 2024.
Commenting on the launch, Standard Life workplace investment development lead Alasdair Birrell said: "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 managing director of workplace Gail Izat added: "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 said: "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."
