Standard Life has announced plans to launch a new alternative pension default fund that is underpinned by a significant (up to 25 per cent) allocation to private assets.

The new strategy, Future Opportunities, is designed to maximise member outcomes by providing diversified access to private assets and opening up a previously unavailable asset class with the potential to increase long-term returns.

As an additional default option for employers, the strategy will provide a mix of private equity, real assets, infrastructure, private debt and venture capital from private markets to deliver added diversification to the other asset classes within the profile, which include listed equity, UK property, fixed income and liquid alternatives.

With an emphasis on the quality of the underlying assets, the allocation to private assets is expected to increase incrementally over time with the potential to reach 25 per cent in line with Standard Life’s current view that this allocation can help maximise net outcomes for members.

Building on Standard Life's existing £35bn Sustainable Multi Asset default strategy, Standard Life said that it will also draw on the private market expertise of Future Growth Capital, the independent private markets solutions business recently established by Standard Life's parent company, Phoenix Group, and Schroders.

The fund will also utilise Standard Life’s sustainable investment principles and Sustainability Improvers labelling for underlying listed equity and investment-grade credit allocations.

Commenting on the forthcoming launch, Standard Life head of investment proposition development, Callum Stewart, said: “The introduction of Future Opportunities aims to make investing in private markets mainstream for millions of pension savers.

"It will provide the potential for better returns and a level of diversification not previously readily available in a pension default fund, while building on the proven blueprint of our Sustainable Multi Asset strategy.

"It underlines our commitment to improving outcomes for members and our leadership in the provision of private assets, and is a further demonstration of our support for the Mansion House Accord with improving outcomes front and centre of our approach.”

Standard Life managing director of workplace, Gail Izat, added: “We have a strong track record of continually developing our proposition to improve outcomes.

"By accessing private markets through Future Growth Capital, our dedicated investment manager, we can offer more choice to employers and the prospect of higher returns to members, while also cementing our commitment to the Mansion House Accord.”

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