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Pension investors commit internship to black youths

written by Bella Palmer

Entities in the British investment management industry have joined internship for educated black youths to tackle underrepresentation of black people

Railways Pension Scheme and Universities Superannuation Scheme are among some 80 entities in the British investment management industry that have committed to offering a paid internship to university-educated black youths next summer.

The initiative is a move to tackle chronic underrepresentation of black people in the City. The programme’s premise is that providing 100 internships for black candidates each year ought to lead to a measurable increase in the number of black portfolio managers in the long-term.

The initiative is the idea of Jonathan Sorrell, president of Capstone Investment Advisors, and was led by him and Dawid Konotey-Ahulu, co-founder of Redington and Mallowstreet, Michael Barrington-Hibbert, founder and managing partner of Barrington Hibbert Associate and Wol Kolade, managing partner of Livingbridge.

The intern roles on offer are in critically important investment teams and intended to give meaningful opportunities.

We felt we wanted to do something really tangible to build a bench of compelling black talent in our industry for the long-term, said Sorrell. By providing such a special entry point into portfolio management, we hope to attract great black students to a career path they may not have otherwise contemplated.

Konotey-Ahulu said: In over two decades in the City, I have rarely come across anyone who looks like me. It is so powerful that the investment management industry has agreed to help welcome more black talent into our industry. We hope other professions will follow suit and have an impact on the representation of black talent in their own industries.

The organisations participating in the initiative represent various parts of the investment management industry, including long only and hedge funds, private equity, credit and real estate managers, and consultants alongside pension fund investors.

More are encouraged to join.

The £30m (€32.6m) defined benefit (DB) scheme of the Family Building Society has been transferred to TPR Retirement Solution’s DB master trust.

The pension scheme will bring 250 members to TPT Retirement Solutions, 66 of whom are currently active in a cash balance section.

Andrew Barnard, finance director at the Family Building Society, said the ongoing COVID-19 crisis had accelerated some of the improvements the organisation had planned.

Collaborating with TPT reduces risk, creates a more robust scheme for our members and the Society, and helps improve our capital position, he said. We are delighted to have transferred our scheme to TPT’s DB master trust and take advantage of the benefits that this structure offers, he said.

Mike Ramsey, CEO at TPT Retirement Solutions, said: The current economic situation has brought the benefits of our DB master trust to the fore, as those companies who use TPT have been able to concentrate on their business rather than running their pension scheme.

Consultancy LCP has called for the government and pensions regulator (TPR) to provide more clarity about the pensions-related treatment of property funds that re-open after having been gated due to the coronavirus crisis, saying the current situation risked “trapping savers in low return pensions”.

According to the consultancy, workplace pension schemes with members that actively chose to invest in property funds will have to make a decision about what to do with future contributions if the member expresses no active preference.

It highlighted the legal risk that a property fund could be treated as a default fund if the pension scheme decides that the member would have wanted the money to go into the fund and starts to redirect new contributions accordingly.

However, property funds could be in breach of the 0.75% charge cap applied to default funds in auto-enrolment arrangements, and according to LCP, “it is understood that some schemes are considering simply leaving member money going into low-risk, but low-return cash funds for the long-term, leaving it to members to make their own decisions”.

LCP partner and head of DC, Laura Myers, said: Where members have actively chosen to invest in property, they have been willing to face higher charges in the hope of securing better returns.

It would be perverse if this was now regarded as a default arrangement and further, in breach of the charge cap. It would be even more perverse if the result was that member funds continue to be invested in an overly cautious way, which is likely to produce a lower pension pot at retirement, she said.

Myers said, TPR’s guidance on this does not go far enough and leaves the issue open to legal interpretation and unfortunately worse outcomes for members. We urgently need clarity from government and The Pensions Regulator so that members do not lose out.


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