The People’s Pension is set to start investing a “significant” proportion of the £31bn it manages in private markets later this year, with a target of growing the allocation to £4bn by 2030.
The UK master trust said it is preparing to take its first steps into private market investment in the coming months, with the imminent appointment of a private markets specialist and the creation of a research capability.
It added that a “substantial” part of this new asset allocation could be deployed in the UK if assets meet the return requirements.
The master trust expects that its trustees will eventually target allocating up to 10% of growth pool assets – or £4bn – by 2030, initially in assets such as infrastructure and real estate.
It said this allocation will depend on its ability to access a “dependable pipeline” of good-quality investable assets that meet its return requirements at a fee level that leaves benefits in the hands of members and with the right operational structures in place.
This latest announcement follows the scheme’s statement last year that it had now reached the scale to deploy meaningfully into private markets.
The People’s Pension already invests 14% of its members savings in UK-based assets within its growth stage default fund.
Mark Condron, chair of The People’s Pension board of trustees, said the announcement was a “significant step forward” on the path toward the master trust investing in private markets, including key parts of the UK economy.
He said: “We are demonstrating how a responsible asset owner, operating at the right scale, can invest in both the best interests of its members and to the benefit of the wider economy in which they work.”
Patrick Heath-Lay, chief executive officer of People’s Partnership, the pension provider of The People’s Pension, added that it is a “pivotal time” for UK pensions, with the government indicating a direction toward scale and value for savers.
He said: “As an independent £31bn master trust, without shareholders, we believe that now is the time to increase our investment in private assets for the benefit of our savers and the growth of the UK economy. The People’s Pension has a vital role to play in this exciting plan for the future of UK retirement savings.”
Dan Mikulskis, chief investment officer of People’s Partnership, added that for the scheme to invest in private markets over this period, it is “critical” that the wider investment community, with the government’s support, provide a dependable pipeline of investable opportunities that deliver good value for The People’s Pension’s 6.8 million savers.
The scheme’s commitment has been welcomed by the chancellor Rachel Reeves.
She said: “Growing the economy is the number one mission of the government. This public commitment from one of the UK’s largest independent pension master trusts to invest here, at home in Britain, will help drive economic growth and support our milestone of improving living standards across the UK.”
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