How open architecture life wrappers are redefining pension strategy

First published on pensionprofessionals.com

Laura Catterick says this evolving model can offer an attractive path forward

Image: Laura Catterick, Mobius: The future of pension investing will be defined by structures that are open, adaptable, and rigorously governed

Rethinking investment access – why open architecture and life wrappers are redefining pension strategy

In today’s complex and cost-sensitive investment environment, pension schemes and wealth managers face a challenging dilemma. We are all expected to deliver better member outcomes, reduce fees, meet increasingly rigorous regulatory requirements, and respond dynamically to market developments. These pressures are especially acute for mid-sized and smaller schemes, which often lack the resources and scale to compete with larger institutional investors.

A compelling solution is emerging at the intersection of open architecture platforms and the use of life company fund structures. Together, they are creating new pathways for trustees, wealth managers, and pension providers to deliver value, reduce friction, and align with public policy goals.

Delivering true investment flexibility

Conventional platforms are often encumbered by limitations. They rely on proprietary fund menus or are tied to the investment preferences of a sponsoring institution. This model restricts the ability of advisers and fiduciaries to curate truly whole of market strategies aligned with specific scheme objectives, whether that’s cashflow-matching for maturing DB schemes, or building diversified private market exposure in a DC environment.

Open architecture platforms stand in stark contrast. By giving clients access to a wide universe of fund managers, asset classes, and wrappers, they offer a far more flexible toolkit. Mobius, one of the leading UK examples, supports over 900 funds across accumulation and income mandates, from more than 80 asset managers. Its independence means there is no inherent bias toward particular strategies or asset managers. Selection is purely needs-based and client-led.

This model enables greater choice and better outcomes. Advisers can tailor portfolios using best-in-class solutions. Trustees can build governance-friendly, multi-asset blends with better fee transparency. And critically, both can respond more nimbly to macroeconomic change and emerging investment trends.

Expanding access through life wrappers

While open architecture creates optionality, life wrappers bring structure, simplicity, reduced costs and efficiency of execution. The life fund format – long used in insurance-based pension solutions – offers several key advantages for schemes and providers alike.

First, it enables tax-efficient investing, particularly for overseas assets. Mobius’ own analysis shows that unit-linked pension funds can significantly outperform comparable unit trusts, largely because of lower withholding taxes and reduced embedded costs.

Second, life wrappers provide a pooled vehicle through which even smaller schemes can access sophisticated strategies. Rather than bearing the operational and legal complexity of investing in private equity or infrastructure directly, schemes can gain exposure via the life-wrapped fund managed by an authorised provider. Mobius has played a key role in this space by helping launch and seed the first Long-Term Asset Funds (LTAFs), which are increasingly being integrated into blended funds and default DC solutions.

Third, life funds are fully regulated and benefit from strong governance. In the Mobius model, this includes due diligence on managers, liquidity assessments, valuation scrutiny, and oversight aligned with FCA and PRA standards. This gives everyone involved confidence while easing administrative burden.

Meeting the moment: policy, reform, and alignment

The UK pensions landscape is undergoing meaningful reform. The Mansion House Accord sets out a commitment to investing more in private markets and long-term productive assets. This is further supported by the Pensions Investment Bill, which seeks to remove barriers and encourage schemes to invest in ways that support UK economic growth.

These reforms align closely with the benefits offered by life wrappers and open architecture platforms. By making infrastructure, private credit, and growth equity funds accessible to a broader range of schemes, these structures unlock the potential for greater pension engagement with productive capital. Meanwhile, the ability to wrap complex assets in a regulated, tax-efficient format ensures alignment with both fiduciary responsibilities and permitted-link regulations.

This is not just about headline-grabbing reforms at the national level. For wealth managers and smaller schemes, it’s a question of capability. The policy direction is clear: pensions must play a more active and innovative role in the economy. But without the right infrastructure, it’s hard for smaller actors to participate. Mobius’ structure addresses this gap by combining institutional-quality oversight with operational simplicity.

A future-ready investment model

There’s a reason why life wrappers and open architecture are gaining traction not just in the pensions sector, but also among charities, endowments, and family offices. These models offer a powerful blend of regulatory certainty, cost control, and strategic flexibility. They support everything from passive equity allocations to bespoke private market mandates. They reduce the friction associated with custody, dealing, and tax. And they enable trustees and advisers to construct portfolios that are truly outcome-focused.

For private wealth managers, pension schemes, and product providers looking to improve client outcomes while managing their own regulatory risk, this evolving model offers an attractive path forward. It is cost-efficient, operationally light, and compatible with the long-term goals of both policymakers and savers.

The future of pension investing won’t be dictated by one-size-fits-all models or outdated platforms. It will be defined by structures that are open, adaptable, and rigorously governed. Those embracing open architecture and life-wrapped solutions today are positioning themselves not just for compliance, but for leadership.