Pension’s race to net-zero


a master trust reimagined

Tomorrow, employers can choose to participate in a pension plan whose standard investment strategy will  decelerate the creation of carbon emissions to zero.  This article looks beyond the headline and asks what the impact of this bold move will be on workplace pensions.

No doubt many reading of this in this weekend’s FT, will be wondering how a fintech that nobody has heard of , can achieve so much so soon and I will be queuing up  for Cushon’s seminar on Wednesday morning. I imagine that places on the Demio session will be in hot demand and I’m not able to share a link but if you want to get in the line – email

Genius or gimmick?

It would be easy to dismiss Cushon’s  “pensions reimagined” campaign as a gimmick, easy but wrong. Since taking the Salvus master trust over, Cushon has installed a new set of trustees under Roger Mattingly, they include Dianne Day, Barry Parr and Andrew Warwick-Thompson. With no disrespect to the previous trustees, this looks like a significant raising of the bar.

On the corporate side, Cushon was founded by Ben Pollard and Phil Hollingdale who combine entrepreneurial flair with actuarial discipline. Troy Clutterback, former head man at NOW is MD and its chaired by Duncan Howarth. The money behind Cushon comes from UNUM, the health insurer. This would suggest that what is going on is more genius than gimmick.


There is undoubtedly a “green-grab” going on amongst workplace pension providers. Nest has led the charge committing 15% of its assets to private equity and aims to be carbon neutral by 2050 or sooner. Its policy aims to align Nest with the Paris Agreement goals to keep global temperature rises within 1.5C above pre-industrial levels by 2050. It sets out a goal of being net-zero across its investments by 2050 or earlier, with the expectation that carbon emissions in its portfolio will halve by 2030.

People’s Pension has radically overhauled its default fund under green-campaigner Nico Aspinal while several insurers, most notably Scottish Widows, Legal & General, Aviva and most recently Aegon, have taken ambitious steps to clean up their investments prior to COBS 26.

Pension Bee has shown how a SIPP can make a difference by offering not just the L&G FutureWorld fund, but getting the insurer to launch a fossil-free fund (the investment equivalent of going vegan). It’s also encouraging to see investment platforms such as SJP (under superstar Robert Gardner) putting climate change as a key risk for mitigation.

What Cushon is doing is further disrupting a market that until recently was complacent and indolent. I wonder how the authors of IGC and Trustee statements as recent as 2019 are feeling about some of their statements and most of their omissions. Cushon is raising the bar , I suspect by purchasing a lot of carbon offset, my question for Wednesday is whether this purchase is being made by its members or its shareholders.

The impact that members should be after, is one where the cost of reducing their money’s carbon footprint is met out of their annual management charge, not on top of it and how and who finances such a dramatic improvement in Cushon’s environmental impact , will be of interest to more than the consumer lobby.

Reporting (opportunity or chore?)

We expect, by the end of the month, to see the detailed regulations behind the Pension Scheme Bill’s TCDF clauses.

The cultural change that is needed , is for pension schemes (DC schemes in particular) to see TCDF reporting as a commercial opportunity rather than a compliance chore.

If making our money matter becomes a core activity of a pension scheme, then TCDF reporting becomes the shop window for reporting. My understanding that as a part of “reimagining pensions” Cushon will be moving from the Aegon to the Mobius platform. I reported on the work that Minerva have been undertaking with Mobius in a recent blog, both organizations are struggling to get reporting on TCDF from managers employed by the employer but they are leading the charge.

For me, Cushon’s move towards neutralizing the carbon toxicity of its investments , must be evidenced by its reporting and that means that the Trustees need to be working with Mobius and Minerva to raise the game of its underlying managers.

In the short term, Cushon can buy carbon neutrality, but in the longer term it has to emerge through the good work of its underlying investment managers.

Who carries the cost?

The genius of Cushon will be tested over time by the commercials of the scheme. If the cost of increased stewardship from fund managers is passed on in higher fees, then who will pay those fees? The recent decision of the DWP’s not to include transaction costs in the charge cap could be taken as a signal for fund and asset managers to bury the stewardship and transition costs involved with embedding ESG in the valuation of the fund- effectively making members pick up these costs through lower performance.

This could mean the total cost of owning a workplace default smashing through the 0.75% pa barrier and heading north of the old 1% stakeholder cap. With fund management margins still estimated as well in excess of 30%, this should not be acceptable to trustees.

The cost of stewardship needs to be absorbed into existing management charges and not be allowed to add new lines in the hidden costs of fund management that only come to light when it is too late – when poor performance is discovered by analyzing outcomes.

I notice that Cushon are keen to advertise Salvus’ recent fund performance to the FT, this is the right thing to do, not least because it creates a precedent for future years. But performance needs to be viewed in the context of what other schemes have done and I hope that Roger Mattingly and the management of Cushon will not duck full disclosure, not just of costs and charges but of value attained by members.

We need to ensure that the marketing advantage that Cushon will enjoy through reimagining pensions, is not paid for by members.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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