NOW: Pensions, the UK workplace pensions company that is owned by Danish labour market pension fund ATP, has appointed Redington as its investment consultant, according to trustee chair Nigel Waterson.
NOW: Pensions, with 1.2m members, is the third-largest auto-enrolment scheme in the country and competes with government-backed NEST.
Waterson, the former Conservative Party pensions spokesman, told RI it has just hired Redington “to run the slide rule” over its investment strategy. It used KPMG before, he added.
Redington is the fast growing firm co-founded by Dawid Konotey-Ahulu and Robert Gardner, the team behind online pensions forum Mallowstreet. The appointment comes amid what Waterson termed a “market on steroids” as the auto-enrolment market develops.
One issue has been the governance, or lack of it, of so-called master trusts, which are trust-based pension schemes used by different employers.
Incredibly perhaps, there was no legislation in this area, with schemes merely having to register with the tax authorities. Waterson acknowledges that master trusts “are the future” for the sector, although legislation currently going through Parliament won’t be in place until 2019.The Pensions Regulator wants master trusts to get independent assurance under a framework it has developed with the ICAEW (Institute of Chartered Accountants in England and Wales).
Waterson sees the current market of around 75 providers consolidating over the next two or three years to just a few big players such as NOW: Pensions and NEST.
The increasing focus on ESG factors in this sector was shown recently by NEST’s seeding a new UBS climate change fund and the exclusion of Cairn Energy from its ethical fund.
Alongside Waterson on the trustee board are leading figures such as former trade union boss Lord Monks and former Government Actuary Chris Daykin.
Most members probably have no idea that the assets — currently £375m on behalf of 25,000 employers but predicted to grow over time — are run out of Denmark by a team by a small team at ATP headed by Mats Gosvig.
With investment strategy based around risk allocation and not asset allocation, the investment return in 2016 was 10.8%, said CEO Morten Nilsson. NOW: Pensions itself posted a loss of £14.4m loss for the year ended 2015, according to filings at Companies House.