TPT Retirement Solutions, one of the leading workplace pension schemes in the UK, today announces that it will invest £54 million into private equity through its defined contribution (DC) Master Trust default target date funds.
Members of TPT’s Target Date Funds, whose investments are managed by AllianceBernstein, will see 3.5% of their pension pot allocated to private equity investments at the growth stage. The total percentage will decrease as members get closer to retirement age.
Research by AllianceBernstein shows that over the long-term, investment in private equity is likely to provide higher returns than public markets. The allocation is expected to contribute an additional 3.0% on an annual basis above global listed small cap equities. For example, for a 25-year-old member who plans to retire at the age of 65, this incremental return enhancement could add a cumulative 2.0% to returns by the end of the growth stage of TPT’s Target Date Funds.
The allocation to private equity will be in listed private equity assets such as investment trusts and the stock of private equity investment managers. This approach is expected to provide long-term return enhancement, while also providing diversification to the funds’ growth assets and avoiding the high costs and illiquidity of direct private equity investments.
Members of TPT’s Target Date Funds will see no change in costs.
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