Cushon and on and on!

I’ve been thinking a bit over the past few days about how my pension is invested. This follows Nest’s announcement that it was increasing its allocation to private markets and expected to be invested 20% in alternatives. That’s a lot of money heading to investors such as Octopus and a lot of good things for investor’s money to end up in.

While I have money in Nest , I don’t have money in Net zero pension provider Cushon who have  launched what they are calling a  market leading investment strategy with the largest allocation to private markets in UK Master Trust sector.

Here are the claims made by Cushon in their press release


  • New investment strategy sees 15% allocation to private markets and is the first DC pensions provider to deliver impact across 100% of its portfolio.
  • The investment strategy will invest in wind and solar farms, forestry, battery tech, green hydrogen and social housing.
  • In an industry first, Cushon will engage and connect defined contributions savers with their money through private markets investments in environmental and social impact projects and programmes to feel proud of.
  • 62% of employees would engage more if they knew their pension was having a positive impact on climate change.
  • The new strategy which launches in early 2022 will reduce investment risk as the world moves towards a greener future.

As you’d expect, I greet this news with rather a lot of skepticism. As I’ve been writing, I am struggling to understand the “greenium”, the cost of getting into these new assets and I’m not clear how much good this new money will be doing. Will it simply drive down the price of the assets as money pours in or will it be “additive”, having a really positive impact?

My first question is “how is this being delivered?”

I’m told , the new portfolio of investments uses  listed bonds and equities and a multi asset private markets portfolio. “This will deliver as social impact that savers can feel proud of”.

It is currently the largest Master Trust allocation to private markets (15%) and the first in the DC sector to deliver impact across 100% of the portfolio. I am not sure what “the portfolio” means but I expect that Julius Pursaill , who is the strategist behind this, will tell me!

Cushon’s new strategy aims to increase the potential for greater investment returns by focusing on greener companies which are generally expected to perform better in the longer term.

This is fine but is this expected out-performance already priced in? Is the value in the time that Cushon can hold the stock? How can I tell if this is genuinely valuable or just virtue-signalling?

Cushon’s 200,000 members’ pensions will be invested in environmental projects such as the planting of new sustainable forests and in financing new wind and solar farms. It will reduce risk by improving diversification, ensuring members’ money is safeguarded against lower returns from ‘brown’ (carbon emitting) investments as the global economy transitions to net zero.

Cushon announced earlier in the year that it has jumped its competition and become net-zero in 2021, it did this by buying a load of carbon offsets funded by the shareholder, presumably, the funds are now driving down the carbon footprint to allow Cushon to continue to be “net zero”, but cynically, isn’t this just a risk transfer from shareholder to member. I don’t know, but I want to!

To ensure strong returns for members the Trustees will, for the first time, include private market investments in both developed and emerging markets. These historically have not played a big part, if at all, in defined contribution pensions but they offer improved potential returns with markedly reduced investment risk as they allow for further diversification.

Cushon’s wasn’t the only announcement yesterday. We also had an announcement from the FCA that trustees such as Cushon’s will be able to invest in Long Term Asset Funds which will target at least 50% of assets in illiquid private markets. Is Cushon going to take advantage and is it going to take advantage of the proposed changes in the permitted links regulations (I am told it is moving to an insurance platform – Mobius).

The Trustees will work with Schroders Capital, which has $70 billion of assets under management and is the private markets investment division of Schroders, the global asset management group, to manage investments in new high impact projects including sustainable infrastructure, clean tech, natural capital, financial inclusion and climate insurance, as well as social and affordable housing. Lombard Odier Investment Managers will manage listed bonds focusing on the most promising companies that are accelerating towards net zero with the aim of supporting that transition. Wellington will manage listed social impact bonds, and listed equities will be managed by Macquarie to a Cushon custom-designed climate and social impact index created by Solactive.

This sounds big-ticket stuff, none of this sounds like it comes cheap, so who is picking up the bill?  What is this custom-designed climate and social impact index? Is it the kind of benchmark that can measure the value of impact or is it part of an elaborate hoax on investors (aka green-washing)?

I am challenging not accusing, I really want this to be as good as it sounds but the hairs on the back of my neck stand up because I see no evidence that this stuff actually delivers value either in terms of better savings outcomes or positive impact in the real world.

Certainly Roger Mattingly , Chair of Cushon’s Trustees thinks he’s pulled off a coup

“The changes announced to our investment strategy demonstrate our commitment to sustainability and responsible investment which we believe supports better long-term financial outcomes for our members. We have spent considerable time undertaking due diligence of the investments and fund managers, as well as negotiating costs to ensure that we can include private market investments well within the confines of the charge cap. We are certain the new investment strategy will deliver excellent retirement outcomes for our members.”

That’s fighting talk but we’ll have to wait to see if this “certainty” is well-placed.

Meanwhile we have Ben Pollard, Founder and CEO of Cushon saying:

“A good number of people will be able to name their pension provider, but a miniscule proportion will be able to name the underlying investments. This passive relationship has become the industry norm, but it’s one of the reasons there is apathy, particularly among younger savers. We need a new approach that places saver engagement at the heart of the pensions industry. That’s why a big focus of our new investment strategy includes, for the first time for the defined contributions market, connecting savers with investments in projects and companies that they can feel proud of and engage with. Our research shows that 62% of employees would engage more if they knew their pension was having a positive impact on climate change.”

So what does this mean in practice Ben? How will savers get to know their investments and what will they be able to do other than gawp in awe?

I may be getting an answer from Cushon’s Strategic Adviser, Julius Pursaill

“Private markets increasingly offer sources of return that listed markets don’t – forestry and micro finance for example, as well as private equity – these give members access to better diversification, higher expected returns and ultimately significantly improved investment outcomes. We will deliver regular updates to members about the positive change their pension savings are delivering for the planet and look forward to announcing novel ways our members will be able to engage with these investments in the coming months.”

Right now I have three thoughts

  1. Thank goodness we have people who are saying these things and doing these things. The new wave of pension providers including Smart, Pension Bee and now Cushon are pushing at an open door with Government and obviously with those in the private markets accessing new sources of value
  2. But is this all for real, where is the evidence that this stuff has delivered in the past and how do Cushon get prices down for fund management to manageable levels. Is this a Jack that will jump the box no sooner than the default charge cap is loosened?
  3. Finally, how does Cushon intend to grow? So far it has grown through acquiring first Salvus and latterly the Workers Pension Trust. But it needs organic growth either from new employers entering the workplace or from the secondary market of failing occupational schemes and employers moving from other multi-employer schemes. If this pop-up on their website is the start of that pitch, I can see many employers aligning their values with their pension’s.

Cushon are great at answering questions like these, I look forward to hearing from them and giving them access to the blog as a right of reply. I hope they see these as fair challenges and I’m sure the phone lines will be humming if they don’t.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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5 Responses to Cushon and on and on!

  1. John Mather says:

    We have had this debate before but look at the summary of a recent report (2016)

    “I define wealth creation as the accumulation of market value in excess of the value that would have been obtained if the invested capital had earned one-month Treasury bill interest rates. I calculate that the approximately 25,300 companies that issued stocks appearing in the [sample] since 1926 are collectively responsible for lifetime shareholder wealth creation of nearly $35 trillion, measured as of December 2016. However, just five firms (ExxonMobil, Apple, Microsoft, General Electric and International Business Machines) account for 10 per cent of the total wealth creation. The 90 top-performing companies, slightly more than one-third of 1 per cent of the companies that have listed common stock, collectively account for over half of the wealth creation. The 1092 top-performing companies, slightly more than 4 per cent of the total, account for all of the net wealth creation.”
    If you would like the full report just email me

    Kind regards


  2. Eugen N says:

    A lot of investment managers names in the article, all waiting to make a turn on the savers money.

    How will measure the “green” factor, I have no idea, apart from using some green paint!

    Apart from what, it will be the savers (who were not asked in the first place what benefits they get from private equity managers) who lose important pension benefits by not investing those funds in listed markets.

    We have great companies listed out there, and the market is pretty good at pricing them. There is no need for private markets for these savers. ,

    • John Mather says:

      Eugene This has no been my experience in giving pensions advice since 1973
      The hardest part is persuading someone to defer spending to create a fund in the first place. But if the model for a 40 year old on national average wage splits the wage budget 40% essentials with 20% for each of tax ( including NI) savings and discretionary spending you can clearly see that most prefer instant gratification at the expense of saving For 22 million who earn less than the basic rate threshold clearly even with a tax subsidy is not feasible to save. The next issue is return and it is possible to design an investment that consistently beats the market but the retail investor is denied entry and even for professionals the compliance issues boost the prices charged to provide a fund.

      IFAs have the qualifications to advise in more holistic sense but have been so demonised over the years. I’d it was a level playing field DB failures would be treated as mis-selling The effect effect on the beneficiary is the same

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