Partnership

First published on corporate-advisor.com

Pension providers are now looking beyond LTAFs when it comes to innovative private markets investments says Joshun Sandhu, head of investment solutions & partnerships at Mobius

Last week’s announcement that Smart Pension has made a strategic investment into two Octopus Energy Generation funds is more than just good news for clean energy, it also shows how UK pension investments are evolving. 

Backed by Rachel Reeves, the deal includes the UK’s first commercially funded ground source heat pump network in South Wales. This deal is about innovation, not just in energy markets, but through the way pension funds can now invest in these infrastructure opportunities.

These investment are not through LTAFs (Long Term Asset Funds). They are Luxembourg-domiciled vehicles, one open-ended and one closed, with no daily liquidity. In other words, this is the kind of structure most wouldn’t expect to see in a DC pension default. And yet here we are.

Making complex, alternative structures investable for DC defaults doesn’t happen by accident. It takes appetite, expertise and the technology to bring it all together.

Unlocking access through new thinking

Today, most large DC schemes invest through unit-linked insurer platforms. These platforms sit between the scheme and its investment options but most are vertically integrated, offering in-house private market solutions including LTAFs launched by their own asset management arms. This excludes access to a range of external strategies.

The result is limited choice, reduced competition, and innovation that struggles to scale. This is especially problematic as schemes move further into the more nuanced, higher-stakes world of private markets.

But this approach brings open architecture, conflict-free governance, and forward-thinking technology together, enabling a clean energy infrastructure deal like Smart’s to become part of a DC default fund.

Technology as the difference-maker

Behind the scenes, advanced fund technology does the heavy lifting. The ability to blend liquid and illiquid assets into a single vehicle that meets daily valuation and cashflow requirements is essential. What’s needed is an infrastructure that allows for automated rebalancing, intelligent top-ups to private markets and precise liquidity management. This keeps control where it belongs, rather than handing liquidity decisions to private market managers who are potentially not set up to handle them and who would charge a premium to do so.

When liquidity risk is managed centrally and intelligently, trustees can focus on strategy. They are free to choose from the broadest possible investment universe rather than being limited by legacy systems or conflicted commercial incentives.

LTAFs are not the only answer

The LTAF is a welcome step forward for the industry. But it is not the only option. Many of the barriers to accessing private markets do not stem from regulation, but from a lack of curiosity, limited operational flexibility, or an unwillingness to try new approaches.

Permitted links rules already allow for more than many platforms acknowledge. The problem is not necessarily with the rules themselves, but with how they are interpreted and applied. Too often, ambiguity becomes a reason not to act rather than as a signal to innovate.

With the right infrastructure in place, many high-quality, proven private market strategies can be implemented today. It requires collaboration, confidence, and a shared willingness to overcome the structural frictions that have held the market back.

Looking to the future

Trustees deserve more than a narrow set of pre-approved options. They should have the freedom to allocate to best-in-class strategies and the operational support to implement their decisions effectively.

When clean energy infrastructure can be included in a DC default fund, it shows that the aims of the Mansion House Accord and the Leeds Reforms are absolutely achievable.

The LTAF is part of the solution, but the journey does not end there. Real progress will come from an ecosystem that embraces experimentation, shares knowledge freely, and works across boundaries.

This is why we are celebrating the Smart Pension and Octopus Energy news. It’s a development driven by curious and collaborative minds and is helping turn bold ideas into real-world pension investment solutions.

Tech-led workplace pension provider Smart Pension appoints award-winning platform Mobius to accelerate growth and drive next phase of investment strategy

Smart Pension, the UK’s tech-led workplace pension provider, today announces a strategic partnership with leading institutional investment platform and solutions provider Mobius. As part of the partnership, Mobius now provides the investment platform for Smart Pension’s £5bn Assets Under Management (AUM) and 1.4 million member-strong pension scheme, following the successful implementation onto the Mobius platform.

The appointment will connect Smart Pension’s ambitious growth plans with Mobius’ award-winning portfolio administration technology and expertise to drive the next phase of Smart Pension’s investment strategy. It will deliver the flexibility and choice required to continue building a market-leading investment proposition for Smart Pension members, including meeting its 2040 net zero target and offering more innovative public and private market investments and solutions.

Smart Pension and Mobius are closely aligned in their commitment to innovation and fintech, opening up the full extent of technology-led solutions and investment possibilities.

Smart Pension serves over 1.4 million members in the UK with fast, secure and sustainable workplace pensions. Mobius’ flexible platform allows clients to develop and deploy bespoke investment solutions, combining strategies from the world’s leading asset managers, including access to private market assets.

Paul Bucksey, Chief Investment Officer of Smart Pension, said:

• “This partnership with Mobius will contribute to our growth strategy in the UK as well as bringing flexibility and enhancements to our market-leading investment proposition. This includes our 2040 net zero target and our ambition to provide a well diversified portfolio across public and private markets. We’re confident that in Mobius we’ve found the best partner that will bring enhanced capability for our members and we look forward to working together.
• “We’re very proud of our fintech heritage at Smart Pension and this collaboration embodies what’s possible when two leading fintechs come together to develop the best pension solution for members.”

James Finch, CEO of Mobius, said:

• “Our appetite to innovate for our clients directly matches with Smart Pension and this is a fantastic opportunity to support their ambition to continue providing a market-leading pension offering to their members.
• “As Mobius celebrates its 10-year anniversary of innovation in investment administration and solutions, we are delighted to welcome Smart Pension to the Mobius platform.
• “Our appetite to innovate for our clients directly matches with Smart Pension.  We are thrilled to be working in partnership to further develop their pension proposition to deliver better outcomes for members.”

We are delighted to let you know that we are holding our third annual investment manager seminar on 20 April 2023 at The Brewery in Chiswell Street, London, with speakers from Mobius and industry experts.

Titled ‘The New Paradigm’, we have an agenda which looks at the changes which have occurred in the pension investment landscape during 2022. We’ll also set out how Mobius works with investment managers to position their products with trustees and consultants.

We will be talking about the new paradigm and what it means from a Mobius perspective. Glenn Cameron of Cartwright will set out the consultant’s perspective, during discussions on what this means for new fund opportunities. We’ll also have a focus on the mastertrust sector with presentations by David Porter of Mobius and Julius Pursaill from Cushon.

Proceedings will be wrapped up with an open Q&A forum, followed by a drinks and networking reception for all guests.

Invitations to the seminar have been issued to our partner asset managers. Spaces are limited but if you work at an investment manager and would like to join us, please email us: marketing@mobiuslife.co.uk as we have a small number of spaces remaining.

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Mobius Life held its second annual investment managers seminar on Thursday 28 April at The Brewery conference centre in London. Around 80 guests attended representing over 50 investment management houses. It was fantastic to have an in-person event after the lockdowns and to catch up with so many friends from the industry.

We believe this tremendous turnout demonstrates confidence in our approach to delivering platform services from across the investment management community.

We were pleased to be able to report Mobius continues to grow. We now have nearly 750 clients and over £23 billion in assets on the platform. We are also innovating for our clients and investment managers. Our focus for 2022 and beyond is on delivering ESG, TCFD and transaction cost reporting, supporting schemes with illiquids and income distributing funds and providing the building blocks to enable DB and DC consolidation.

We presented on our support for consolidators, explaining how our flexible platform, extensive fund range and ability to innovate and manufacture fund solutions enables DB and DC consolidators and master trusts to deliver for their members.

We were delighted to welcome three guest speakers.

Graham Martin of Schroders Solutions spoke of his experience of working with Mobius to deliver complex and illiquid solutions to pension schemes of all sizes.

Priya Jassal of ISIO explained how the Mobius platform enabled them to deliver a better service to their smaller clients, including offering low management and platform fees, breadth of investment opportunity, expert onboarding and transition management, together with specialist reporting and monitoring services.

Sarah Smart of FidesIQ gave a fascinating presentation on the changing world of data and how pension schemes and investment managers will be able to deliver better solutions and outcomes by accessing and interpreting the huge amount of data available to them.

We would like to thank all our speakers for their time and work in delivering such interesting presentations and all our guests for attending the event.