Now Pensions has made its first investment in affordable housing as part of plans to allocate capital to private markets in the UK.
The UK defined contribution (DC) pension fund said the investment would support its ambition to invest at least 10% of its default fund in private market assets, including at least 5% in the UK by 2030.
The £4.77bn (€5.52bn) pension fund for more than two million workers in the UK said the investment would support the development of three regulated rentals for those on social housing waiting lists and receiving benefits, along with local affordable rentals for individuals priced out of their local markets, and shared-ownership models for those unable to afford a home locally.
Now Pensions, a pension provider owned by Cardano Group, is one of a number of signatories to the UK government’s Mansion House Accord, which is designed to encourage more UK DC pension fund investment in private markets.
The voluntary initiative aims to achieve better financial outcomes for DC savers through the higher potential net returns offered by private markets, while also boosting UK investment.
Joanne Segars, chair of Now Pensions’ board of trustees, said: “This is our first investment into private markets. Investing in affordable housing presents an opportunity to generate strong financial returns for our members while contributing to a vital social need.
“The Now Pensions Trustee will continue to explore opportunities to expand its exposure to private markets, with a particular focus on sectors that offer strong growth potential and align with the long-term needs of our members.”
Martyn James, Now Pensions’ director of investment, said: “This investment is expected to provide complementary return drivers compared to more traditional parts of the growth portfolio, providing good diversification.
“Our investment strategy remains focused on delivering long-term value, and we are confident that our diversified approach, which includes an ambition of at least a 10% allocation to private markets by 2030, will continue to benefit our members’ retirement savings.”
To read the latest IPE Real Assets magazine click here.
