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Denmark’s ATP says new UK DC arm to have responsible investment at core

Interview with Chair and CEO at Now:Pensions

The new UK pensions management company set up by DKK600bn (€80.7bn) Danish labour market fund giant ATP will have responsible investment at its core, say senior managers.

ATP set up Now:Pensions last year to compete in the UK’s new workplace-based, auto enrolment, defined contribution pensions market which starts this year and could cover between 4-7 million people that don’t belong to a company pension scheme. It will be a competitor to the government-backed National Employment Savings Trust (NEST). Now:Pensions announced its first company client win late last year.

Nigel Waterson, the former pensions spokesman for the Conservative Party, who chairs Now:Pensions’ trustee board, told RI: “ATP has always been driven by a social and ethical approach to investment, and it’s just a case of translating these principles to this country.”

ATP is one of the world’s foremost responsible investors whose returns have averaged more than 7% a year since inception in the 1960s.

Its UK offshoot will share characteristics with the parent with assets to be run out of Denmark by Chief Investment officer Mads Gosvig, ATP’s former Chief Risk Officer. The assets will be separate from ATP’s, but like ATP’s own assets, around 85% will be run in-house, said Morten Nilsson, Now:Pensions’ CEO, ATP’s former Head of International Operations.

This is in contrast to NEST which will outsource its assets to a variety of managers. Waterson and Nilsson said Now:Pensions wouldn’t be offering separate ethical funds like its rival.Nilsson said: “We don’t believe in having an ethical fund, we believe in being ethical.
“We have to be a responsible investor and we have to think about whether the assets we invest in are governed correctly and meet ethical standards – because there’s an investment risk if they’re not.

“As a member of a pension fund I would be more interested in a fund that is run to high ethical standards across the board rather than a single fund that might be good or might not be good.”

Waterson argued there was “an element of political correctness” about NEST offering an ethical fund.

“We don’t believe in having an ethical fund, we believe in being ethical”

“We’re just not in that game at all because we are providing one single fund which is run ethically. A lot of this is window-dressing because 90% of the people in nest will end up in the default fund.”

Rival NEST will offer a Sharia compliant fund, but Nilsson says it is really hard to find a good one to offer to clients, although Now:Pensions would listen to market demand.

ATP sees the UK venture as an opportunity to both grow its asset base and cut costs for members. “If this business gets as big as we hope ATP will leverage off the assets here in the UK – cutting costs for both UK and Danish members,” says Nilsson.

“If we get the right set-up here it can become very big.”