The Employer Pension Pledge will commit employers to:
Prioritise net returns, not just cost, when selecting or reviewing a DC pension providers
Request greater transparency from providers on private market allocations.
Over 20 of the UK’s largest employers have pledged to maximising employee pension value by prioritising retirement outcomes for their workforce, rather than focusing on cost reduction, when selecting or reviewing pension providers.
The voluntary agreement, named the Employer Pension Pledge, is led by the Lord Mayor of London, Alastair King, in partnership with leading employers and pension industry experts. Supporting over half a million UK workers and nearly a million savers, the Pledge seeks to transform the UK’s pension investment culture – moving beyond a narrow, cost-focussed model to champion a value-for-money approach that puts long-term returns for savers at the centre.
Although defined contribution (DC) pensions are the fastest-growing retirement savings vehicle in the UK – projected to exceed £1 trillion by 2030 – only 30% of the population are on track to achieve a moderate standard of living in retirement[1].
The Pledge, which will be signed by the Lord Mayor at the Mansion House Financial and Professional Services Dinner, is separate to the Mansion House Compact and Mansion House Accord. Together, these separate initiatives have mobilised the UK’s largest DC pension providers, representing over 90% of the market, to commit to investing at least 10% of default funds in private markets by 2030, with a minimum of 5% allocated to UK assets, but these commitments do not apply to signatories of the Employer Pension Pledge.
Signatories to the Pledge include: Aberdeen Group, Aviva, BT, Canada Life UK, First Group, Goldman Sachs, Legal and General, London Stock Exchange Group Plc, M&G, Mitie, Nationwide Building Society, NatWest Group, Octopus Energy, Octopus Investments, Phoenix Group, Prudential Plc, Samworth Brothers, Santander, Schroders, Standard Chartered, Tata Steel UK, and Tesco.
While the Compact and Accord focused on the supply side – engaging pension providers – the Employer Pension Pledge activates the demand side of the value chain, mobilising employers who influence the direction of pension fund investment. It aligns with the principles of the upcoming Financial Conduct Authority’s Value for Money (VFM) framework, which is being reviewed to align with the Pensions Regulator.
Alastair King, Lord Mayor of London, said:
“Employers have always played a decisive, if underappreciated, role in shaping retirement outcomes. This Pledge is about making that role visible, responsible, and focused on value. The Pledge harnesses the convening power of the Corporation in support of growth and shared prosperity across the United Kingdom. I am grateful to the major employers who have helped lay the foundations of the Pledge. In the months ahead, I look forward to welcoming many more organisations – large and small – to join the existing signatories. This is an example of the mayoralty working across the entire pension investment value chain to deliver better outcomes for savers.”
Chancellor of the Exchequer, Rachel Reeves said:
“We welcome this commitment from major employers to boost returns for their employees.
“To support this, we are creating pension megafunds to unlock more investment and boost people’s pension pots, going further and faster to drive growth as part of our Plan for Change to put more money into people’s pockets.”
Minister for Pensions Torsten Bell said:
“Workers rightly want their pension savings to work harder for them – ensuring they get the maximum bang for every buck saved.
“It is normally employers, not employees, who choose which pension scheme workers are invested in. So I welcome this pledge to encourage employers to focus on what matters most to their workers: how fast pension pots grow.”
Ruston Smith, Chair of the Tesco Retirement Savings Plan, said:
“As the largest private sector employer in the UK, with more than £5bn of assets in our defined contribution pension scheme, the retirement savings of our colleagues really matter to us. We continuously look for the best UK and international private market and listed opportunities to improve future investment returns, net of costs, to maximise our members’ retirement savings. We know how important this is for our members and that’s why we support and have signed up to the Employer’s Pledge.”
Richard Oldfield, Schroders Group Chief Executive, said:
“For too long now, the majority of defined contribution pension schemes have been focused on costs rather than delivering the best possible returns for savers and, ultimately, retirees.
“A greater focus on value for money and long-term investment outcomes is a strong step in the right direction. Furthermore, these proposals should help unlock capital to invest in private markets, such as infrastructure, benefitting savers and the wider economy.”
Graham Sutherland, FirstGroup’s CEO, said:
“Our employees are at the heart of our business with the skills, expertise and knowledge to drive our future success, and we are committed to finding ways to deliver better retirement outcomes for them. We are very pleased to sign the Employer Pension Pledge as the ambitions of the Lord Mayor of London, Mansion House Compact and Mansion House Accord in this area align with the high standards we set for our pension schemes.”
Dame Julia Hoggett, CEO LSE plc and Head of Digital & Securities Markets, LSEG
“LSEG is proud to be one of the first organisations to commit to the Employer Pension Pledge and welcomes its ambition to focus on prioritising net returns for pension savers. Taken alongside the Government’s reform agenda and the Mansion House Compact and Accord, we welcome the overarching approach to drive greater investment into our domestic economy and deliver better retirement outcomes for UK employees.”
António Simões, Group Chief Executive Officer of L&G, said:
“As one of the UK’s largest pension providers we are proud to be among the signatories of the Corporation’s Employer Pension Pledge. We fully support this initiative and its ambition to deliver better retirement outcomes for UK workers while unlocking the long-term potential of pension capital to drive economic growth.”
Amanda Blanc, CEO, Aviva, said:
“We’re proud to support the Employer Pension Pledge. As a major UK pension provider and employer, Aviva is committed to delivering the best possible outcomes for our customers and our people, including investing in UK assets—such as innovative, early-stage businesses—while ensuring excellent value.”
Andrea Rossi, CEO of M&G plc said:
“As a long-standing private markets investor, M&G understands their power to shape the world, drive economic growth and give individuals the benefit of enhanced returns though greater diversification. This is another important initiative that shifts the focus from cost to value, helping individuals to maximise their pension savings.”
Jason Windsor, CEO, Aberdeen Group said:
“Rightly there has been much focus on how to improve long-term outcomes for pensions, by looking beyond a narrow, cost-focussed model. It is equally important to have an honest discussion about the barriers that need to be overcome to democratise private markets.
“This pledge is an important starting point. If the opportunities are compelling and transparency is improved, investors will be able to take a broader view, to consider a wider range of asset classes. A greater focus on long-term value should support this.”
Nick Harding, Chief People Officer at Canada Life UK, said:
“At Canada Life UK, we are proud to support the financial wellbeing of our colleagues throughout their careers and into retirement. Signing the Employer Pension Pledge underscores our commitment to ensuring that the decisions we make about our workplace pension arrangements prioritise the long-term interests of our colleagues and ensures the scheme delivers value, so we can support our people in achieving a secure and sustainable retirement.”
Chris Hulatt, Co-Founder of Octopus Investments, said:
“We have long been a supporter of the UK’s private markets and its potential to deliver strong outcomes for investors. Whether that’s through our institutional funds or through our retail products, such as Venture Capital Trusts. The Pledge therefore has natural alignment with what we believe in here at Octopus. It’s great to see businesses, alongside ours, coming together to educate employees, many of whom are long-term UK savers, on the benefits of allocating to this asset class.”
Charles Noble, Samworth Brothers Chief Financial Officer, said:
“At Samworth Brothers we welcome this initiative. As a fourth-generation family business, ensuring that our people enjoy quality pension arrangements has always been a priority for us. Businesses are vital to the UK pension landscape, both in encouraging employees to participate and benefit from occupational schemes and also through fund investment strategies.”
The Employer Pension Pledge is supported by:
Rain Newton-Smith, Chief Executive, CBI, said:
“The Employer Pension Pledge marks a vital step forward in ensuring the UK’s pension system truly works for savers. For too long, the focus has been solely on reducing costs, without enough focus on diversification and long-term value.
“By aligning employer decision-making with the goal of maximizing employee pension value, the Pledge complements the vital work already underway through the Mansion House Compact and Mansion House Accord. Together, these reforms are important steps for unlocking the patient capital needed for UK growth, fostering a culture of long-term, productive investment and sustainable growth. Alongside broader consideration to the full range of UK assets, both listed and private markets can provide vital capital for companies to grow, and people to generate wealth to support their retirement.”
Zoe Alexander, Director of Policy and Advocacy at Pensions UK, said:
“With defined contribution assets continuing to grow, workplace pension funds designed for automatic enrolment contributions are pursuing more sophisticated investment strategies. The Employer Pension Pledge is a welcome initiative, demonstrating that leading employers recognise the potential for higher net returns and are prioritising overall value for money when selecting a pension fund to deliver the best retirement outcomes for their employees.”
Dr. Yvonne Braun OBE, Director of Long-Term Savings Policy at the ABI, said:
“It’s encouraging to see leading employers rally behind the Employer Pension Pledge. Championing value for money over cost alone puts employees’ interests at the heart of employer decisions on pensions. It will help usher in the saver-focused culture across the whole pension system that we’ve long called for.”
Tina McKenzie, Policy Chair at the Federation of Small Businesses (FSB), said:
“Now that all two million small employers have navigated auto-enrolment, it’s important that all the workplace pension schemes they have set up deliver at least adequate performance, contributing towards their employees’ retirement. We are, however, concerned that returns from many providers’ funds do not. So we welcome that the Corporation has led the way with its pledge, initially signing up a number of major large employers to press for good returns. This could have a positive knock-on effect for smaller employers seeking improved schemes for their employees.”
Philip Smith, Director of Defined Contribution at TPT Retirement Solutions, said:
“We wholeheartedly endorse the government’s efforts to get Britain saving smarter. Employers must champion net returns—not just cost—because what ultimately matters to employees is the value they retire on, and not the fees saved today. A low-cost scheme that benefits from limited oversight and delivers poor returns will just leave members worse off than one that’s slightly more expensive but that consistently grows their savings. This is also why employers should be demanding greater transparency from providers, especially when it comes to how funds are allocated across markets. Understanding where and how money is invested is key if companies want to assess long-term performance and improve on it.”
ENDS
Notes to editors
The Employer Pension Pledge does not require changes to pension providers or endorsement of private markets or the Mansion House Accord.
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.
[1] https://www.pensionsuk.org.uk/Portals/0/Documents/Policy-Documents/2023/Five-Steps-to-Better-Pensions-Final-Report-Oct-2023.pdf
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