Seventeen of the UK’s largest workplace pension providers have pledged to invest billions into private markets – including a minimum 5% into UK-based assets – under a new initiative announced this week, the Mansion House Accord.
Spearheaded by the Association of British Insurers (ABI), the Pensions and Lifetime Savings Association (PLSA), and the City of London Corporation, the Accord is a voluntary commitment aimed at enhancing long-term returns for defined contribution (DC) pension savers, while simultaneously directing capital into UK infrastructure, clean energy and businesses.
Signatories include household names such as Aegon, Aviva, Legal & General, Nest, Phoenix Group, and Royal London. Collectively, they oversee over £250 billion in pension assets, a figure expected to grow over time.
Under the Accord, participating providers have committed to allocating at least 10% of their DC default funds to private markets by 2030, with 5% of that total earmarked specifically for the UK.
The government-backed initiative aligns with the wider ambition to unlock pension capital to fuel domestic growth and foster a more diversified investment landscape for retirement savers.
Regulatory and industry reaction
Nausicaa Delfas, Chief Executive of The Pensions Regulator, welcomed the move, stating: “Savers rightly expect good performance from their pension investments. This initiative could both boost returns and unlock more capital for the UK economy.”
Chris Cummings, CEO of the Investment Association, echoed this optimism saying: “This is a welcome commitment to the UK growth agenda. Private markets, including infrastructure and property, can play an important role in improving outcomes for investors and channelling productive capital into key sectors.”
But the response from the adviser community and governance professionals has been more cautious, with calls to ensure client interests remain central.
Jodie Gallagher, Head of IFA Product at FE fundinfo, warned advisers not to lose sight of their fiduciary duties:
“While unlocking capital for UK infrastructure is a noble goal, it must be balanced with safeguarding investor outcomes. The FCA’s Retirement Income Review and Consumer Duty make it clear: advisers must test more than just average returns – including inflation shocks, downturns and longevity risks.”
Balancing duty to savers with national goals
Several industry leaders emphasised the importance of creating an environment where investing in UK private markets is not just a political goal, but a financially sound choice for pension trustees.
Helen Forrest Hall, Chief Strategy Officer at the PMI, described the Accord as a “significant moment,” but added:
“Pension funds will invest where opportunities align with long-term value and security. The Government must focus on creating the conditions that make UK markets not just an option, but an attractive one.”
Similar sentiments came from Lou Davey of the Independent Governance Group, who called for more clarity around the types of initiatives the government views as priorities for capital deployment:
“Trustees’ legal obligation is to scheme beneficiaries, not the UK economy. Collaboration with the wider industry will be key.”
From pledge to practicality
While some providers, like now:pensions, are already preparing to make their first UK private market investments—focusing on affordable housing—others are waiting for more details on how suitable opportunities will be identified and priced.
Dan Kemp, Chief Research and Investment Officer at Morningstar, struck a note of caution:
“This appears focused on supporting British industry rather than purely for investor benefit. Mandating where capital is invested may lower returns and introduce risk if not carefully implemented.”
Meanwhile, Iain McLellan of Isio noted the voluntary nature of the Accord and flagged the need for a robust asset pipeline saying: “Without expansion in suitable UK private assets, any increase in investment may simply inflate prices—undermining value for members.”
Client outcomes remain paramount
For financial advisers, the key takeaway is this: the direction of travel is clear, but client outcomes remain paramount.
The Accord signals a strong push from both government and industry to mobilise pension capital in support of UK growth. However, any changes to portfolio construction—especially increased allocations to illiquid private assets—must be carefully stress-tested within client cashflow models and long-term retirement plans.
As Gallagher of FE fundinfo succinctly noted: “Mandated UK investment exposure is just one more input in a cashflow model. It can’t be ignored—but nor can it override the adviser’s duty to their client.”
