Fidelity International is to add private assets to its £16.9bn default investment strategy for UK workplace pension schemes.

Fidelity will integrate the private assets with its FutureWise strategy via a long-term asset fund (LTAF) structure from next year.

The strategy will then become an investor in Fidelity’s Diversified Private Assets LTAF, which received regulatory authorisation in August.

The pension provider and asset manager said the move will provide a new set of investment opportunities, enhance diversification, improve risk-adjusted returns and improve overall member outcomes.

Stuart Warner, global head of platform solutions at Fidelity International, said: “The pensions adequacy gap is very real and will create significant retirement issues for individuals over the coming decades if we do not address and enhance overall member outcomes.

"For our DC members whose investment horizon is measured in decades not years, we believe there is strong alignment in the benefits of private market investments and member objectives.

“Fidelity International is highly supportive of emerging efforts to unlock so-called ‘productive capital’ from defined contribution schemes. We welcome the government’s current review of the pensions and retirement landscape, with increased focus on values and outcomes. Our LTAF supports the government’s focus, putting long-term pension money back into the real economy.” 

Fidelity will begin the integration process in 2025, when the fund officially launches, with plans to gradually increase exposure to the LTAF over three years to reach a target allocation of 15%.

Fidelity claims to be the largest pension provider in the UK with over 700,000 DC scheme members.