Big pension investment changes announced for the UK
Up to £50 billion of investment for UK businesses and major infrastructure projects is set to be unlocked through a new agreement with Britain’s biggest pension funds, the Treasury has announced.
17 workplace pension providers managing around 90% of active savers’ defined contribution pensions will sign the Mansion House Accord at a roundtable with the Chancellor and Minister for Pensions in the City of London on Tuesday, 13 May 2025.
Signatories to the Accord will pledge to invest 10% of their workplace portfolios in assets that boost the economy, such as infrastructure, property and private equity by 2030. At least 5% of these portfolios will be ringfenced for the UK, expected to release £25 billion directly into the UK economy by 2030.
“This investment could support clean energy developments across the country, delivering greater energy security and helping to lower household bills, as well as delivering growth finance to Britain’s world-leading science and technology businesses – creating jobs, boosting businesses and putting more money into people’s pockets,” the Treasury said.
“Pension savers will also benefit from the commitment to invest in private markets. Comparable Australian schemes invest significantly more in private markets and domestic companies than UK schemes, and research suggests greater investment in private markets can deliver security through diversified asset holdings and potentially drive higher returns,” it said.
Today’s announcement follows a 2023 agreement where 11 funds committed to the aim of investing 5% of their workplace-defined contribution default funds – the off-the-shelf funds providers offer to the vast majority of savers – in unlisted companies by 2030.
The new commitment involves the vast majority of the industry and brings more assets into scope, doubles the target from 5% to 10%, and includes a specific commitment to investing 5% in the UK.
“Progress against the commitment will be monitored and the initiative will be reinforced by measures to be announced in the upcoming final report of the Pensions Investment Review,” Treasury said.
“The final report will tackle fragmentation in the UK pension system, creating pension megafunds that take advantage of scale and consolidation like Australian and Canadian funds do, to invest in productive assets like private markets and big infrastructure projects.”
It added that some pension funds have already indicated privately that they will go beyond the targets agreed through the Mansion House Accord, which could lead to even more direct investment in the UK economy.
“As major investors, the pensions industry already plays a vital role in driving growth in the UK and globally,” said Yvonne Braun, Director of Policy, Long-Term Savings, Health and Protection at the ABI.
“The Accord formalises the industry’s ambition to invest more in private markets to diversify investments, support innovation and infrastructure, and ensure prosperity. Investments under the Accord will always be made in savers’ best interests.”
“It is now 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,” Braun said.
