Mithesh Varsani, head of investment solutions at Scottish Widows, is our guest for the first episode of series seven of The Professional Investment Podcast.
He chose MandateWire’s ‘Are Australia’s pension funds stuck in a performance testing loop?’ as his news story of the week.
This article raises interesting questions for UK policy makers as they put together the value for money framework. This will operate a traffic-light system based on how a scheme performs.
There are questions as to whether such a performance metric should be a permanent feature or retired after an initial period to allow weak performers to be weeded out. This would give greater flexibility to the remaining schemes.
We talked about how different parts of The Pension Scheme Act will influence industry behaviour.
Will the scale requirements push scheme to embrace more low-cost investments to win market share? And will this work against value for money which aims to improve net returns?
Another key policy initiative is to encourage pension schemes to invest more in UK productive finance. But if VFM encourages investment herding, this might act against allocating to private assets.
Like other DC providers, Scottish Widows is grappling with the need to provide members with a retirement income.
The final part of our discussion focused on what private assets could be incorporated at this part of the member journey to allow them to remain invested in growth
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