The Mansion House Accord is a voluntary expression of intent by signatories to invest at least 10% of their defined contribution (DC) default funds in private markets by 2030, with at least 5% allocated to the UK.
The 17 pension providers that signed up to the Mansion House Accord said the move could ultimately boost member outcomes but warned progress would be dependent on a “pragmatic” approach to implementation from the government as well as the facilitation of a “steady supply” of high-quality UK investment opportunities.
The Mansion House Accord – announced today (13 May) – is a voluntary expression of intent by signatories to invest at least 10% of their defined contribution (DC) default funds in private markets by 2030, with at least 5% allocated to the UK.
Aegon said that, by committing to the Accord, it builds on its support for the Mansion House Compact and underscored its dedication to improving member outcomes through investing in a broader range of private assets previously not accessible to DC pension savers.
It explained this includes a focus on UK investments, aligning with the government's ambitious growth agenda.
17 pension providers target 10% allocation to private markets in Mansion House Accord
Aegon UK managing director of investment proposition Lorna Blyth said the firm was committed to ensuring its customers could access and share in the potential growth and success of new, innovative companies as part of diversified portfolios but urged the government to adopt a "pragmatic" approach to the reforms.
She added: "The Accord is a key element of the government's growth agenda, alongside other initiatives likely to transform the UK's DC pensions market. It comes as the conclusions of the Pensions Investment Review are expected imminently and further fundamental changes are expected in the Pension Schemes Bill later this spring.
"This makes it essential that the government adopts a pragmatic approach to implementation. Realistic timeframes and a steady supply of high-quality UK investment opportunities across all private asset classes are crucial for ensuring success.
"This includes collaborating with more organisations such as the British Business Bank to provide access to diverse types of private assets – from private equity to infrastructure, which are all vital for optimising member benefits and developing investment portfolios designed for long term growth."
Similarly, Aon said the Mansion House Accord was a "great step forward" in helping to deliver better expected returns over the long-term.
Aon chief investment officer for DC solutions Jo Sharples said: "We believe that investing in private assets will benefit pension scheme members by delivering better expected returns over the long-term, ultimately resulting in higher retirement outcomes.
How pension providers are tackling private markets
"The new Mansion House Accord is a great step forward in achieving this and is a fantastic example of how the UK pensions industry can work together to break down barriers to enable greater investment in private assets."
Meanwhile, M&G said individuals could significantly benefit from greater investment into private markets.
It noted its own £128bn with-profits fund, PruFund, already invested extensively in private markets – citing M&G's 2021 launch of Catalyst, a multi-billion-pound, purpose-led, private asset strategy focused on innovative companies, as an example of its work in this area.
M&G CEO Andrea Rossi said: "Private markets play a fundamental role in shaping the world around us through long-term investment in real estate and infrastructure projects, alongside lending to and investing in companies that contribute to economic growth.
"By enabling and encouraging greater investment into these assets, individuals could benefit from enhanced returns, greater diversification and better value by having their pensions invested in this way.
At the same time, NatWest Cushon said the majority of savers wanted to see more of their money invested in the UK – views it said aligned with the Mansion House Accord.
The master trust surveyed over 2,000 adults in April finding that 52% of savers agree that pension funds should invest more in the UK and only 8% disagree. It said younger savers are more likely to want investments in the UK than older savers.
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CEO Ben Pollard said: "The investment case for UK private markets is strong, which is why we are a signatory to the Mansion House Compact and have also signed up to the new Mansion House Accord.
"But there is another positive angle - reconnecting people with the investments their pension is making. These types of investments are real and tangible and show savers how hard their money is working to improve their standard of living in the UK.
"So it is really encouraging to see this appetite from pension savers to invest in UK assets, particularly among younger people. That is exactly the type of customer the industry generally struggles to engage, so it's fantastic to see that investing further in UK private markets aligns with what they want."
This article originally appeared in Investment Week's sister title Professional Pensions.
