Universities Superannuation Scheme, London, will add private markets to the asset allocation of its defined contribution plan's default option, Default Lifestyle Option, beginning next month, a spokeswoman said.
Following a U.K. government consultation about the benefits of illiquid asset investing for defined contribution plan participants, USS has developed an in-house investment strategy for the £1 billion ($1.3 billion) DC plan.
"We will take time to build up our allocation to private markets assets using new cash flows in order to minimize transaction costs," another spokeswoman said, adding that USS expects to have between 15% and 20% of the default funds invested in private markets.
Managed by USS Investment Management, the private markets subsidiary of USS Group, USS will enhance the returns with no increase in fees to the participants, who are employees at U.K. academic institutions.
The portfolio will be invested in infrastructure, property, private debt and private equity, including onshore and offshore wind farms, airports and utilities.
"We have always been clear that any DC investments must be within stringent cost boundaries that demonstrate value for money to our members and employers," said Bill Galvin, group CEO of the £68 billion USS, in a news release. "This exciting development is being done at no additional cost to them, in line with our overall investment philosophy,"
USS' private markets portfolio has £17 billion in assets.