Aegon has announced enhancements to its largest workplace pension default fund, integrating environmental, social, and governance (ESG) factors and new private market investments. The £12 billion universal balanced collection fund, benefiting 700,000 members, will see these improvements starting from the third quarter of this year.

The fund, part of Aegon’s ‘Retirement Choices,’ ‘One Retirement,’ and other platform products, will feature a bespoke solution managed by Aegon Asset Management, JP Morgan Asset Management, and BlackRock. The private market allocations will be structured within long-term asset funds (LTAF), pending regulatory approval.

These changes are set to positively impact the UK built environment sector. The inclusion of infrastructure investments, such as those managed by JP Morgan Asset Management starting in early 2025, will likely support the development and maintenance of key facilities and services across the UK. This includes investments in renewable energy, transportation networks, and sustainable real estate projects, aligning with broader government initiatives to improve the country’s infrastructure and reduce carbon emissions.

Lorna Blyth, Managing Director of Aegon’s investment proposition, stated: “We believe our changes will improve the growth potential of the universal balanced collection and future Aegon funds that utilise these enhanced capabilities. The changes target robust risk management and diversification, to offer members improved outcomes and value for money.”

Blyth also highlighted Aegon’s commitment to achieving net-zero greenhouse gas emissions across their default funds by 2050, with a 50% reduction by 2030, and to invest £500 million in climate solutions by 2026. This investment will support projects that directly contribute to climate change mitigation and adaptation, many of which are expected to come from the built environment sector.

By 2025, Aegon anticipates that over £30 billion of default assets will be moved into funds considering ESG factors, supporting sustainable development and infrastructure projects within the UK.