Sustainable Multi Asset – how we’ve delivered for your clients and their members

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Garry Latimer

April 22, 2024

3 mins read

December 2023 marked the third anniversary of our flagship workplace default investment option – Sustainable Multi Asset Universal SLP (SMAU). Our main take to market default solution has been designed to help improve members’ pension pots over the medium to long term - with responsible investing embedded, we report every quarter against specific, measurable targets for sustainability.

We recognise that when choosing a pension scheme, a default investment option must be suitable for the majority of members, now and in the future. That's why, while our solution focuses on providing good outcomes for members, our approach is driven by insights - and our strategy is built to be adaptable in the face of change.

Providing a reliable and competitive choice in a volatile market

Since launch, we've seen one of the most tumultuous periods in recent market history. Despite this uncertainty, we’ve seen our growth fund deliver a 17.9% return (gross cumulative) and our pre-retirement and at-retirement funds delivering 14.1% and 4.8% returns (gross cumulative) respectively, over three years to 31 December 2023. However, it’s important to note that past performance is not a guide to the future performance of a fund.

We can confidently state that SMA is a tried and tested strategy that has delivered competitive returns for our members – and now holds c.£24bn of assets under administration across the range of sustainable multi asset strategies.

But in short – it’s a reliable choice that helps make it as straightforward as possible for everyone to save for their retirement, and potentially achieve a good outcome.

An investment built on beliefs

We live by our five core investment beliefs with the aim of delivering the best outcomes for members and meet their needs as they progress through their retirement journey.

  1. Outcomes focused: People are at the heart of our strategy, and we believe in putting member investment outcomes first. We use insights such as the Pensions and Lifetime Savings Association's (PLSA) Retirement Living Standards to consider what lifestyle members really need in retirement.
  2. Future-proofing: We believe future-proofing should be built in as standard so we can steer a course through unpredictable waters, while remaining flexible to regulatory requirements and members’ needs. Since 2020, we've shown a commitment to keeping member default investments up to date. We’ve done this by extending our SMA 10-year strategy between 2022 and 2023 so that around 1.5 million existing members could benefit from improved outcomes. And in doing so we’ve moved over c£15 billion of assets to our sustainable multi-asset strategies, making it one of the industry’s largest workplace default strategies.
  3. Responsible investment: We believe responsible investing leads to better long-term financial outcomes and helps deliver a secure and sustainable future for members. Since launch, our SMAU 15-year strategy has consistently met the sustainability targets set for equity (79% of the growth fund, 57% of the pre-retirement fund and 32% of the at retirement fund) - to reduce carbon intensity by 50%, increase green revenues by 50%, and enhance ESG scores by at least 10%.

    And we’ve taken a strong approach to stewardship, taking our responsibilities as an asset owner seriously and not just relying solely on the work undertaken by our underlying asset managers. In 2023 we signed up to the UK Stewardship Code and published a Group stewardship report, setting out a list of companies that we'll engage with in the future.
  4. Strong governance: We believe robust governance helps us prepare for the future. After living through the extraordinary events of the last few years, we understand it's impossible to forecast what's to come. However, our governance framework is our commitment to continuous improvement – and a promise to members that we will keep their investments up to date.
  5. Independence: Our goal will always be on delivering good retirement outcomes for members. We believe investment independence removes potential barriers to achieving that goal. We have the freedom to select from a range of managers and strategies that will help us to meet the needs of millions of members.

Keeping fit for the future

Our multi-layered approach, and the expertise drawn from both Standard Life and Phoenix Group, helps us continue to drive improvements for SMA and its components.

And for customers close to or in retirement, we'll be evolving our Investment Pathways with similar components to SMA. We anticipate that this will lead to a smooth journey into retirement, and an improvement in outcomes for customers.

As we move through 2024 and beyond, we look forward to developing SMA to meet member needs, and help more people to secure a life of possibilities.

Find out more about our flagship workplace default investment option and download our latest quarterly reports.

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