TPT Retirement Solutions, London, will invest £54 million ($74 million) of its defined contribution multiemployer plan's assets in private equity-like investments, a spokeswoman confirmed Monday.
A 3.5% allocation to investment trusts and stocks of private equity managers will be made by TPT's target-date funds, which are managed by AllianceBernstein, for participants in the growth stage of their retirement journey. The allocation will gradually decrease for participants closer to retirement.
TPT said in a news release that the new exposure is expected to contribute 3% on an annual basis above global listed small-cap equities. For example, a 25-year-old participant expecting to retire at 65 could see an additional 2% return by the end of the growth stage of their journey.
TPT said that the new approach will help its DC plan to avoid high costs and illiquidity associated with holding private equity investments directly, while plan participants will not bear any additional costs.
Speaking about the new allocation, Philip Smith, DC director at TPT Retirement Solutions, said in a news release: "It shows the ability of master trusts to offer greater diversification and better returns for our members. Not only will the allocation towards private equity be beneficial to members, but it can also act as valuable source of capital for growing businesses."
TPT had £1.8 billion in defined contribution assets as of Sept. 30, 2020.
Further details could not be immediately learned.
