The former government actuary, who has recently taken a seat of the advisory board of Now: Pensions, has thrown his weight behind the investment strategy of the new Danish group pension provider.
Speaking at a launch event for Now: Pensions last week, Christopher Daykin said he fully backed the diversified growth strategy of the provider’s Danish parent ATP.
Since launch Now: Pensions has become a separate legal entity from ATP, to the extent that its advisory board, which includes Daykin, even has the power to sack ATP in the event that it fails to perform.
Now: Pensions offers a single default fund with three elements, a managed diversified growth fund targeting cash plus 3 per cent, a retirement protection fund targeting annuity prices and a cash protection fund targeting cash.
ATP points to returns of 7.4 per cent annualised over the last decade as justification of its investment policy.
Daykin said: “The history of being able to manage through thick and thin over the last 10 years that ATP has, including managing quite well through the financial crisis period, demonstrates that this is a robust model that will work in different economic environments.”
Intermediaries say Now: Pensions’ offering, which charges an £18 a year admin fee plus an 0.3 per cent annual product investment management charge, will work out more expensive than Nest for the majority of people in the auto-enrolment target market.
Andrew Cheseldine, consultant at LCP says: “A fundamental difference to Nest is that Now: Pensions charges £18 a year, irrespective of whether people are deferred or not. Nest is charging 1.8 per cent up front, so where there is less than £1,000 a year going in, Nest is cheaper. This means a large proportion of those below £18,000 are better off in terms of charges than Nest, and every deferred member. And as far as we are aware they have not built the admin yet.
“There will be a space for Now: Pensions, but if it is trying to compete with Nest, the problem is Nest is cheaper for the vast majority. On the plus side, it accepts transfers and if you have got relatively high earners with constant earnings it is a better option.
“B&CE is supposed to be coming in with something that will undercut Nest. And there are other providers looking to get into the space. But we need to be certain that these business models are sustainable. So to does the Pensions Regulator.”
James Biggs, head of corporate pensions at Lorica says: “I really welcome another competitor in this part of the market, and I will definitely be talking to them. I like the way the Skandinavians have approached the whole pensions issue, and anything new in our industry has to be welcomed.”
John Lawson, head of pensions policy at Standard Life says: “You have to ask what bells and whistles are they going to be dropping to deliver administration at £18 a year?”