The government wants to see greater DC pension scheme investment in ‘patient capital’ to help high-growth, knowledge-intensive firms scale up. The 2018 Budget announced plans to enable DC schemes to invest in long term, illiquid patient capital assets such as infrastructure, real estate and private equity. This was followed up by an FCA consultation to allow unit-linked investment in a broad range of patient capital assets in December 2018.
If you wish to follow the progress of this development the link to the FCA page is: LINK
So how could the obstacles to DC investment in patient capital be broken down? The FCA is consulting on updating the permitted links regime, which could take away barriers to investing in long-term illiquid funds.
At the same time, some of the UK’s biggest DC funds, including Aviva, NEST, The People’s Pension and HSBC’s and Tesco’s pension funds have said they will work together to explore options for pooled investment in patient capital. This offers the potential to create a fund or funds with enough scale to reduce the impact of illiquidity for scheme members, while keeping costs, which are often high for these types of investments, at an affordable level.
Mobius Life is perfectly placed to support DC schemes who want to invest in funds investing in patient capital. We can help schemes pool assets, address illiquidity, facilitate pricing and improve the day-to-day liquidity management for patient capital assets. As an institutional pension platform we already pool billions of pounds for our clients in a wide range of equity, fixed interest and multi-asset funds.
Using a platform, DC schemes of all sizes could invest in pooled patient capital funds, confident that they can offer their members improved liquidity management and competitive charges.
At Mobius Life we are ready to move as soon as regulation permits. We could be the perfect home of DC schemes, impatient to benefit from the potential long-term growth of patient capital.
Mobius Life Limited 7th Floor, 20 Gresham Street, London EC2V 7JE
t: + 44 (0)20 7847 3300 f: + 44 (0)20 7847 3399 w: www.mobiuslife.co.uk
Mobius Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales at: 7th Floor, 20 Gresham Street, London, EC2V 7JE. Registered No. 3104978. For your security telephone conversations may be recorded.
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