Seventeen of the largest workplace pension providers in the UK have expressed their intent to invest at least 10% of their defined contribution (DC) default funds in private markets by 2030, with 5% of the total allocated to the UK.
The voluntary initiative, to be known as the Mansion House Accord, has been jointly led by the ABI, the Pensions and Lifetime Savings Association (PLSA) and the City of London Corporation. It is aimed at securing better financial outcomes for DC savers through the higher potential net returns available in private markets, as well as boosting investment in the UK.
Based on providers’ current investment holdings, total pension assets in the scope of the agreement amount to £252 billion. The industry expects this amount to increase over the Accord’s lifetime.
Signatories to the new commitment include: Aegon UK, Aon, Aviva, Legal & General, LifeSight, M&G, Mercer, NatWest Cushon, Nest, now:pensions, Phoenix Group, Royal London, Smart Pension, the People’s Pension, SEI, TPT Retirement Solutions and the Universities Superannuation Scheme (USS).
Signatories commit, subject to fiduciary duty and the Consumer Duty, to the ambition of:
• allocating at least 10% to private markets across all main DC default funds by 2030; and
• within that, at least 5% of the total going to UK private markets, assuming a sufficient supply of suitable investible assets for providers.
The commitment is dependent on implementation by the Government and regulators of critical enablers.
The Mansion House Accord builds on, rather than replaces, the Mansion House Compact, continuing industry-led efforts to improve retirement outcomes and drive long-term investment in UK growth. Through the Compact, signed in July 2023, 11 UK pension providers have committed to the objective of investing 5% of DC defaults in unlisted equities, including venture capital and growth equity, by 2030. For providers signed up to both, progress under the Compact counts towards meeting the Accord’s goals. Together, they represent a staged, voluntary roadmap for reform, supported by government, driven by industry.
Barriers to invest in private assets have reduced in recent years thanks to legislative and regulatory reform, as well as operational improvements. However, further progress is needed. The Accord makes clear that Government and regulators will be integral to supporting industry in securing a pipeline of UK investment opportunities and facilitating the Value for Money framework.
Rachel Reeves, Chancellor of the Exchequer, said:
“Through our Plan for Change, we are choosing to back British businesses and British workers. I welcome this bold step by some of our biggest pension funds, which will unlock billions for major infrastructure, clean energy, and exciting startups — delivering growth, boosting pension pots, and giving working people greater security in retirement.”
Torsten Bell, Minister for Pensions, said:
“Pensions matter hugely, they underpin not just the retirements we all look forward to, but the investment our future prosperity depends on. I hugely welcome the pensions industry decision to invest in more productive assets, from growing companies to infrastructure. This supports better outcomes for savers and faster growth for Britain.”
Yvonne Braun, Director of Policy, Long-Term Savings, Health and Protection at the ABI, said:
“As major investors, the pensions industry already plays a vital role in driving growth in the UK and globally. The Accord formalises the industry’s ambition to invest more in private markets to diversify investments, support innovation and infrastructure, and ensure prosperity.
“Investments under the Accord will always be made in savers’ best interests. It is now critical that Government supports the industry’s ambition, by facilitating a pipeline of suitable investment opportunities, tackling barriers to investments, and delivering wider pension reforms effectively.”
Alastair King, Lord Mayor of London, said:
“The Mansion House Accord builds on the strong foundations of the Compact and signals a step change in ambition: more signatories, deeper allocations to private markets, and a clearer commitment to backing UK assets. That includes a renewed focus on revitalising the Alternative Investment Market (AIM) of the London Stock Exchange as well as the Aquis Exchange, which play a critical role in supporting high-growth companies that drive innovation, jobs and productivity. If we want those firms to scale in the UK, we must ensure they have the capital to do so. This is not just about better pension outcomes, it is about building a more dynamic, competitive investment ecosystem. Delivering long-term, sustainable growth is crucial and the City of London Corporation is delighted to have partnered with industry and Government to bring this ambition to life.”
Zoe Alexander, Director of Policy and Advocacy at the PLSA, said:
“UK pension schemes already invest billions in UK growth assets. This Accord demonstrates the collective ambition of the DC sector to do even more, as well as its confidence that the UK will provide the right opportunities to invest, consistent with schemes' fiduciary duty to members.
“The Government, in its turn, has committed to take action to ensure there is a strong pipeline of investable assets for pension schemes. With everyone playing their part, there is great potential to boost returns for savers while providing vital funding to productive growth areas.”
NOTES TO EDITORS
Default funds are used for workers who do not make an active investment choice when saving in a DC pension. Most workers are invested in default funds.
The definitions of both global and UK private markets assets include directly held, or via investment through unlisted funds in property, infrastructure, private credit, private equity and venture capital. AIM and Aquis Growth Market shares may also count towards the target.
For private equity and venture capital, UK assets should reflect underlying investments in UK-registered private companies or partnerships. Infrastructure and property are UK assets if they are located in the UK. For private debt/credit, UK assets should reflect borrowers located in the UK. These definitions will continue to align with the regulatory definitions as per the Value for Money framework.