UK proprietary funds commit £50 billion towards private equity and infrastructure through the Mansion House Agreement
In a significant move to bolster the UK economy and enhance long-term returns for pension savers, 17 major UK pension providers have signed the Mansion House Accord. The agreement, launched in July 2023, marks a collaborative effort between the UK Government and leading pension schemes, including Aviva, Aegon, Legal & General, Nest, and Royal London [1][2].
Key Details of the Mansion House Accord
The Mansion House Accord sets a target of investing £50 billion in private markets and infrastructure by 2030. The signatories commit to allocating around 5-10% of defined contribution (DC) default pension funds into private assets such as unlisted equities, private equity, venture capital, property, and infrastructure [1][4]. The total pension assets under these signatories are approximately £252 billion, expected to grow over time [1].
The focus of the Mansion House Accord is on investing in the communities and infrastructure used by UK workers. The accord aims to increase the private markets allocation from the current 15% to 30% [1][4]. The participants in the Accord include Aegon UK, Aviva, Legal & General, Nest, Royal London, Universities Superannuation Scheme, and several other leading UK pension schemes [1][2].
Government Support and Regulatory Context
The government supports the Mansion House Accord by promising to enhance the pipeline of investable assets. This support comes through its Modern Industrial Strategy and National Infrastructure Strategy, which target growth in "frontier industries" like life sciences and digital technology, thereby facilitating more opportunities for pension schemes to deploy capital domestically [1][4].
The Accord is voluntary and non-binding but backed by political support. However, there is potential for regulatory consequences under the Pension Schemes Bill if schemes fail to meet government investment targets, such as losing eligibility for auto-enrolment [4]. The Financial Conduct Authority’s Targeted Support regime launching in April 2026 aims to help close advice gaps, indirectly supporting these investment moves [3].
Implications
The Mansion House Accord has far-reaching implications for pension savers, the UK economy, and pension providers. For pension savers, the potential exists for higher returns due to the historically stronger performance of private markets over public markets, aiming to improve retirement income [1].
For the UK economy, significant capital flow into UK infrastructure and innovation sectors is expected, fostering economic growth, job creation, and development in strategic "frontier industries" [1][4]. For pension providers, increased fiduciary responsibilities come with the need to select appropriate private market investments while balancing risks and adhering to consumer protection duties [1].
Potential risks include illiquidity and valuation challenges in private markets, requiring careful governance to protect saver interests.
In summary, the Mansion House Accord represents a landmark collaboration between the pension industry and government to unlock £50 billion into private UK investments by 2030, boosting long-term pension outcomes and driving economic growth through infrastructure and innovation funding [1][2][4][5]. It is worth noting that currently, 60% of the private market allocation is already in the UK. The accord will be supported by the forthcoming final report from the UK Pensions Investment Review.
- The Mansion House Accord, signed by 17 major UK pension providers, aims to invest £50 billion in private markets and infrastructure by 2030, with a focus on unlisted equities, private equity, venture capital, property, and infrastructure.
- These signatories, including Aviva, Aegon, Legal & General, Nest, and Royal London, commit to allocating around 5-10% of defined contribution (DC) default pension funds into private assets.
- Institutional investors like Aegon UK, Aviva, Legal & General, and Royal London, amongst others, are expected to increase the private markets allocation from the current 15% to 30%, totalling approximately £252 billion in pension assets.
- The UK government supports this Accord by enhancing the pipeline of investable assets through its Modern Industrial Strategy and National Infrastructure Strategy, which targets growth in areas like life sciences and digital technology.
- The Financial Conduct Authority’s Targeted Support regime launching in April 2026 aims to help close advice gaps, indirectly supporting these investment moves by the pension schemes.
- The Mansion House Accord has the potential to deliver higher returns for pension savers due to the historically stronger performance of private markets over public markets, thereby improving retirement income.
