Aegon’s decision to invest the pension cash of 700,000 savers in private markets, which means investing in riskier start-ups or smaller UK companies, has been questioned by a pension expert.
Chancellor Rachel Reeves and her predecessor, Jeremy Hunt, have been pushing UK pension funds to boost the economy by investing in more start-ups.
But Scott Gallacher, director at Rowley Turton, said it did not automatically mean a better deal for Brits and that, while some companies had the potential to grow, it was not guaranteed. He said: “We shouldn’t pretend pension savers have been missing out on some secret sauce. Assets are assets—whether listed or private—and private doesn’t automatically mean better.”
“If the investments were so truly so attractive, why do managers constantly seek government support, tax incentives, or privileged pension access.”
Gallacher said the investments could be more risky, because they could not be sold as easily as shares, which are listed on the world’s stock exchanges.
“Illiquidity is a major hidden risk, as we’ve seen with property funds, and pension savers in default funds may face issues if they need to switch or draw down in difficult markets.”
“There’s a real concern this shift is being driven more by political goals and asset manager interests than by what’s best for savers. Bigger and more complex doesn’t always mean better outcomes—especially if transparency and flexibility are lost along the way.”
Aegon UK, said it had been given regulatory approval for two Long-Term Asset Funds (LTAF’s) by the Financial Conduct Authority (FCA).
LTAF’s are a new type of regulated fund that invest in long-term, illiquid assets such as private equity, private credit, real estate or infrastructure.
The funds meant it could offer private market investments to 700,000 savers in its largest workplace default fund, the £12 billion Universal Balanced Collection (UBC).
The pension firm was a founding signatory of the 2023 Mansion House Compact, where pension companies committed to invested more in assets which would help grow the UK economy.
Lorna Blyth, managing director of investment proposition at Aegon UK said: “The success in receiving authorisation for all three LTAF’s marks real progress in offering our workplace pension members access to the best available asset classes, that are in line with our objective to provide better outcomes and value.
“This tangible action is in line with Government objectives and will allow members to share in the successes of growth companies, as well as the higher returns expected from other alternative investments. Our journey doesn’t end here – next up is our cornerstone investment into the British Growth Partnership, subject to regulatory approval, which will tap into the full commercial potential of world-class breakthrough technology companies based here in the UK.
“We are committed to maintaining our position as leaders in investment innovation, using our scale to access new asset classes and drive better member outcomes.”
