Developing our investments for our members

These are assets, like infrastructure, that we buy and hold for a long period of time. They aren’t traded on the Public Market or stock exchange.

Think of Private Market assets like buying your own home – it’s likely to be a long-term investment rather than something you’ll buy and sell a few months later.

In comparison, Public Market assets are more readily available on the stock exchange and can be bought and sold much more fluidly.

• Investment in Private Market assets provides investment opportunities not available in Public Markets. It is expected to generate additional long-term returns to help improve your income in retirement.

• We believe that the diversification opportunities provided by Private Market assets also reduces the expected risk.

• As well as long-term returns, investing in Private Market assets has a knock-on effect on the wider economy; by putting money into companies or property, we can help power our economy and benefit the UK infrastructure.

• We can also make a positive difference by influencing how a company is managed or developed, or act as stewards to address risks or issues and drive positive change.

When it comes to investments for a pension scheme, a long-term approach is key to making sure we can align to our members’ long-term investment needs for their future – it’s about balancing risk with return.

As Private Market assets are long-term investments, they allow us to do this effectively and support our long-term approach for our members’ futures.

This approach aligns to government thinking, with the Minister for Pensions and Financial Inclusion, outlining his views in the Department for Work & Pensions’ Investment Innovation and Future Consolidation: 'A Consultation on the Consideration of Illiquid Assets and the Development of Scale in Occupational Defined Contribution schemes’.

In his foreword, the minister wrote that, ‘pension schemes ought to be thinking about the assets which help diversify and improve returns to beneficiaries’.

He continued: ‘These same assets also drive new investment in important sectors of the economy – smaller and medium firms, housing, green energy projects and other infrastructure – which deliver the sustainable employment, communities and environments which all of us wish to enjoy’.

At USS, we have been investing in these assets for a long time and are pleased to be able to offer these assets to members in the Investment Builder for the first time. Any proposed investment will only be made within the stringent boundaries of providing value for money to our members and employers.

We already invest in Private Markets for the Retirement Income Builder, the defined benefit (DB) part of USS that all members join automatically. Examples include the Grand Arcade shopping centre in Cambridge, Heathrow Airport and Moto Service Stations.

If you also have savings in the Investment Builder, the defined contribution (DC) part of USS, from mid-February, you will have access to these Private Market assets. Private Market assets aren’t often available in DC schemes, but our size, strength and experience mean we can now invest this way in the Investment Builder.

Your Investment Builder savings will be invested in funds that will benefit from an allocation to Private Markets if:

• you’re invested in the USS Default Lifestyle Option, where we manage your investments for you

• you manage your investments yourself and have chosen to invest in any of the USS Growth funds (Growth, Moderate Growth or Cautious Growth).

You won’t see any changes to your selected investments in My USS as the Private Market allocations will happen within the funds themselves.

Not sure where you’re invested? Check in My USS.

We will monitor the funds closely and have put in place a number of measures to ensure that the introduction of Private Market assets won’t affect your ability to switch or access your Investment Builder funds, unless in extreme market circumstances.

Investment management charges won’t increase to pay for this development – we’ll be managing these investments in-house, so it’s all built into the subsidised fees that your employer currently pays.

Don’t worry there’s nothing you need to do – we’ll be gradually introducing and expanding our Private Market assets in the Investment Builder over the next year.

You can review your Investment Builder investments at any time in My USS, where you can also choose from a range of funds through the Let Me Do it Option.

You can view our Fund Factsheets in My USS, which look at the performance of our 10 funds in the Investment Builder. They can help you decide where to invest your Investment Builder savings.

For more details about Private Market assets and more information on the Investment Builder, check out A guide to investing in the Investment Builder.