Major British pension funds have pledged to channel an extra £50bn ($66bn) into domestic private markets, including infrastructure, property, and private equity, in a bid to fuel UK growth and improve retirement security, according to a report by Reuters.
The bold commitment, announced by 17 leading investment firms including Aviva, Legal & General, M&G, along with the Universities Superannuation Scheme, NEET, and The People’s Pension, sets a new standard for pension capital allocation as part of the Mansion House Accord.
Under the initiative, signatories aim to dedicate up to 10% of their pension portfolios to higher-yield, higher-risk asset classes by 2030, with half of the new investments earmarked exclusively for UK-based assets. This move is expected to deepen the exposure of tens of millions of pension savers to private markets, traditionally dominated by dedicated private equity and specialist investment firms – a market that industry data firm Preqin projects will surpass $30tn globally by 2030.
Chancellor of the Exchequer Rachel Reeves hailed the accord as a “bold step” that will drive economic growth and enhance financial security in retirement. “This commitment ensures that pension savers benefit from the higher returns generated by well-managed private assets,” she said, emphasising the long-term benefits of a diversified and productive asset mix.
António Simões, Group CEO of Legal & General, echoed these sentiments. “We have long-believed that UK pension savers should benefit from exposure to the higher returns provided by private markets, and this accord significantly reinforces that vision,” he stated.
By committing to invest more heavily in early-stage companies, venture capital opportunities, and green energy projects, the pension funds are set to compete directly with traditional private equity players. Signatories are expected to gain enhanced access to the British Business Bank’s venture capital pipeline through the Financial Conduct Authority-approved British Growth Partnership, potentially unlocking new deal flow across the UK.
While the pledges are currently voluntary, the government has indicated that it will monitor progress and may introduce further measures in an upcoming pensions review. Industry insiders view the accord as a catalyst for increased capital inflows into underdeveloped segments of the UK private market.
A recent YouGov survey, commissioned by NatWest Cushon, revealed that 52% of UK pension savers support increased domestic investment, reflecting broad public backing for the shift towards more aggressive asset allocation strategies that blend long-term growth with enhanced yield opportunities.
