Many UK workplace pension providers have signed the Mansion House Accord as part of their intent to invest at least 10% of their defined contribution (DC) default funds in private markets by 2030.
The voluntary initiative has been jointly led by the Association of British Insurers (ABI), the Pensions and Lifetime Savings Association (PLSA), and the City of London Corporation. The aim is to secure better financial outcomes for DC savers through higher potential net returns available in private markets, as well as boosting UK investment.
Signatories include Aegon UK, Aon, Aviva, Legal and 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.
They have committed to allocating at least 10% to private markets across all main DC default funds by 2030, and within that, at least 5% to UK private markets. The government and regulators will support the industry in securing a pipeline of UK investment opportunities and facilitating the Value for Money framework.
The accord builds on the Mansion House Compact to improve retirement outcomes and drive long-term investment in UK growth. For providers signed up to both, compact progress counts towards the accord’s goals.
Torsten Bell, Minister for Pensions, said: “I welcome the pensions industry decision to invest in more productive assets, from growing organisations 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, added: “The accord formalises the industry’s ambition to invest more in private markets to diversify investments, support innovation and infrastructure, and ensure prosperity. It is critical that the 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: “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. With everyone playing their part, there is great potential to boost returns for savers while providing vital funding to productive growth areas.”
Alison Leslie, head of DC investment services at Hymans Robertson, added: “A voluntary accord signals a meaningful and purposeful way of putting to work billions of pounds of pension scheme assets. It will deliver better member outcomes while supporting the economy that many savers will retire into.”
Patrick Luthi, chief executive officer at Now:Pensions, said: “By investing in appropriate UK private market opportunities, we can together achieve alignment of our member’s long-term interests, with UK growth and benefits to society more broadly. Alongside Mercer, we look forward to continuing to work with the government to promote the right environment to invest in private markets and the UK.”
