Seventeen of the largest workplace pension providers in the UK have agreed 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 Association of British Insurers (ABI), the Pensions and Lifetime Savings Association (PLSA) and the Corporation. It is aimed at securing better financial outcomes for DC savers through the higher potential net returns available in private markets. The Accord will also boost investment in the UK through greater support for UK businesses as well as driving funds into major infrastructure projects and clean energy developments.
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.
The industry expects the amount to increase over the Accord’s lifetime.
Signatories to the new commitment include: Aegon, 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 now, unlocking long-term investment in UK growth. Signed in July 2023, the Compact has seen a total of 11 signatories commit 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, there are still further opportunities to unlock. Government and regulators will be integral to supporting industry in securing a pipeline of UK investment opportunities and, as well as other measures, 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:
“By making pension savings work harder, we are giving people a double win: better returns for their futures and faster growth for Britain. Through our Plan for Change, we are building a stronger economy and real financial security for millions of working people.”
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 Corporation is delighted to have partnered with industry and Government to bring this ambition to life.”
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.”
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 includes directly held, or via investment through funds in real estate, 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.
For infrastructure and property, the percentage of the underlying economic assets located in the UK should be estimated and disclosed. Note that only unlisted assets under these asset classes are in scope of the accord.
For private debt/credit, UK assets should reflect borrowers located in the UK.
These definitions will continue to align with the regulatory definitions per the Value for Money framework.
ENDS
PRESS CONTACTS
Thomas Kingsley, Media Officer, Corporation
T: 07395354886 E: [email protected]
Mark Smith, Head of Media Relations, PLSA
T: 020 7601 1726 E: [email protected]
Helen Mitchell, Head of Communications and Marketing, ABI
T: 07834328512 E. [email protected]
ABOUT THE CITY OF LONDON CORPORATION
The Corporation is the governing body of the Square Mile dedicated to a vibrant and thriving City, supporting a diverse and sustainable London within a globally successful UK.
ABOUT THE ABI
The ABI is the voice of the UK’s world-leading insurance and long-term savings industry, which is the largest sector in Europe and the third largest in the world. It represents more than 300 firms within our membership, including most household names and specialist providers, providing peace of mind to customers across the UK.
ABOUT THE PENSIONS AND LIFETIME SAVINGS ASSOCIATION
The Pensions and Lifetime Savings Association is the voice of workplace pensions and savings. It represents pension schemes that together provide a retirement income to more than 30 million savers in the UK and invest more than £1.3 trillion in the UK and abroad. The PLSA’s members also include asset managers, consultants, law firms, fintechs, and others who play an influential role in people’s financial futures.
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