British pension management conglomerates commit £50 billion towards private equity and infrastructure ventures, as part of the Mansion House Accord agreement
The UK is set to witness a significant shift in its pension investment landscape, with major pension providers committing to allocate billions of pounds into private markets and infrastructure. This ambitious move, spearheaded by the Mansion House Accord and the newly launched British Growth Partnership, aims to unlock capital for clean energy, infrastructure, and high-growth UK businesses, boosting economic growth and enhancing pension returns.
The Mansion House Accord, signed by 17 of the UK's largest pension providers, including Nest, Aviva, Aegon, and Legal & General, aims to allocate up to £50bn to private markets and infrastructure by 2030. Each signatory of the Accord will target a 10% allocation of their defined contribution (DC) portfolios to private markets, with a minimum of 5% committed to UK-based investments.
The British Growth Partnership, a separate initiative, has received FCA approval to launch. This new initiative, supported by the Treasury, will provide DC pension schemes and institutional investors with access to UK-focused venture capital funds, further bolstering the UK's private market investment landscape.
The accord will be supported by the forthcoming final report from the UK Pensions Investment Review, which has recommended several specific reforms to address fragmentation in the pension system and improve access to private market investment vehicles. These reforms include consolidating the DC market, introducing a Value for Money framework, enabling bulk transfers without member consent, creating default decumulation pathways, and reforming the Local Government Pension Scheme (LGPS).
The Chancellor, Rachel Reeves, described these initiatives as a "bold step" that will enhance long-term returns for pension savers. The Mansion House Accord's ambition is to increase its private market allocation to 30% in the coming years, with 60% already invested in the UK.
The British Growth Partnership, an initiative aimed at unlocking capital for clean energy, infrastructure, and high-growth UK businesses, builds on the 2023 Mansion House Compact. The accord builds on the commitment of schemes to investing at scale in private markets and in the UK.
These measures collectively aim to reduce fragmentation by fostering larger scale pools that can access private market vehicles and to improve governance and value delivery across the pension system. They reflect a policy shift toward better aggregation, scale, and investment quality in pensions.
[1] UK Pensions Investment Review Interim Report, HM Treasury, June 2022 [2] Pension Schemes Act 2021, UK Government [3] Mansion House Speech, Chancellor of the Exchequer, July 2022 [4] The Pensions Regulator, Improving trustee standards - a consultation, June 2022
- The Mansion House Accord, consisting of 17 major UK pension providers, aims to allocate up to £50bn to private markets and infrastructure by 2030, committing to a 10% allocation of their defined contribution (DC) portfolios to private markets, with a minimum of 5% invested in UK-based investments.
- Each signatory of the Mansion House Accord will target a minimum of 5% of their DC portfolios, totaling billions of pounds, to UK-based investments in private markets to boost economic growth and enhance pension returns.
- The British Growth Partnership, a separate initiative approved by the FCA, provides DC pension schemes and institutional investors with access to UK-focused venture capital funds, facilitating investment in clean energy, infrastructure, and high-growth UK businesses.
- The Mansion House Accord's ambition is to increase private market allocation to 30% in the coming years, with 60% already invested in the UK, as described by the Chancellor, Rachel Reeves, emphasizing a need to boost long-term returns for pension savers.
- To address fragmentation in the pension system, the UK Pensions Investment Review has recommended several reforms, including consolidating the DC market, introducing a Value for Money framework, enabling bulk transfers without member consent, creating default decumulation pathways, and reforming the Local Government Pension Scheme (LGPS).
- The initiatives like the Mansion House Accord, the British Growth Partnership, and the reforms proposed by the UK Pensions Investment Review collectively reflect a policy shift toward better aggregation, scale, and investment quality in pensions, with a focus on fostering larger scale pools that can access private market vehicles for improved governance and value delivery across the pension system.
