Standard Life has launched an alternative pension default solution focused on private markets.

Its Future Opportunities offering is an evolution of the firm’s Sustainable Multi Asset strategy and is available as a default across trust-based products, including defined contribution master trust and own trust.

Through the default, members will gain access to private assets that aim to provide growth and improve long-term outcomes.

Standard Life said it believed a long-term private markets allocation of around 25 per cent had the potential to enhance returns and improve diversification.

Private assets will be gradually introduced through its asset allocation and portfolio management process, alongside initial public market investments.

It will evolve based on investment assumptions and market conditions, seeking to ensure members are invested in a portfolio that reflects the ‘most appropriate’ balance of risk and return.

To enable the private markets strategy, Standard Life has embedded a series of reviews across asset allocation: asset quality, pace of deployment, impact on member outcomes, and fee transparency.

Standard Life will draw on the expertise of Future Growth Capital, a private markets solutions investment manager established by Phoenix Group and Schroders in 2024.

FSG specialises in private markets asset allocation, manager selection, portfolio constriction, and ongoing portfolio management, operating with investment independence.

The Future Opportunities charging structure includes an overall variable annual management charge (AMC) for private markets and an LTAF performance fee.

Standard Life said the charging structure would be “clear and transparent”, as it introduced significant private market investing within a default “for the first time”.

“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,” commented Standard Life workplace investment development lead, Alasdair Birrell.

“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 chief executive, Andy Briggs, added: “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.”

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