Mansion House Accord revealed

Written by Sophie Smith

13/05/2025

Seventeen of the largest UK workplace pension providers have expressed their intent to invest at least 10% of their defined contribution (DC) default funds in private markets by 2030, with 5% of the total allocated to the UK.

The new commitment involves the "vast majority" of the industry, as signatories to the new commitment include: Aegon UK, Aon, Aviva, Legal & General, LifeSight, M&G, Mercer, NatWest Cushon, Nest, Now Pensions, Phoenix Group, Royal London, Smart Pension, the People’s Pension, SEI, TPT Retirement Solutions and the Universities Superannuation Scheme (USS).

Building on the Mansion House Compact, the new voluntary initiative, the Mansion House Accord, is being jointly led by the Association of British Insurers (ABI), the Pensions and Lifetime Savings Association (PLSA) and the City of London Corporation.

The initiative is expected to unlock up to £50bn of investment for UK businesses and major infrastructure projects, with around £25bn expected to be released directly into the UK economy by 2030.

In particular, the Government suggested that 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 science and technology businesses.

The Government argued that pension savers will also benefit from the commitment to invest in private market, pointing out that comparable Australian schemes invest significantly more in private markets and domestic companies than UK schemes.

Taking on a more ambitious goal, the latest initiative is expected to build on, rather than replace, the Mansion House Compact, where eleven funds committed to the aim of investing 5% of their workplace DC default funds in unlisted companies by 2030.

For providers signed up to both, progress under the compact counts towards meeting the Accord’s goals. Together, they represent a staged, voluntary roadmap for reform, supported by Government, driven by industry.

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.

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 and has been particularly welcomed by the Government.

Chancellor, Rachel Reeves, stated: “Through our Plan for Change, we are choosing to back British businesses and British workers.

"I welcome this bold step by some of our biggest pension funds, which will unlock billions for major infrastructure, clean energy, and exciting startups — delivering growth, boosting pension pots, and giving working people greater security in retirement.”

Adding to this, Pensions Minister, Torsten Bell, said: “Pensions matter hugely, they underpin not just the retirements we all look forward to, but the investment our future prosperity depends on.

"I hugely welcome the pensions industry decision to invest in more productive assets, from growing companies to infrastructure. This supports better outcomes for savers and faster growth for Britain.”

ABI director of policy, long-term savings, Yvonne Braun, also emphasised the role of pensions, stating: “As major investors, the pensions industry already plays a vital role in driving growth in the UK and globally.

"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 Government supports the industry’s ambition, by facilitating a pipeline of suitable investment opportunities, tackling barriers to investments, and delivering wider pension reforms effectively.”

PLSA director of policy and advocacy, Zoe Alexander, also highlighted the deal as demonstration of the "collective ambition of the DC sector to do even more, as well as its confidence that the UK will provide the right opportunities to invest, consistent with schemes' fiduciary duty to members".

“The Government, in its turn, has committed to take action to ensure there is a strong pipeline of investable assets for pension schemes," she continued.

"With everyone playing their part, there is great potential to boost returns for savers while providing vital funding to productive growth areas.”

Adding to this, Lord Mayor of London, Alastair King, said: “The Mansion House Accord builds on the strong foundations of the compact and signals a step change in ambition: more signatories, deeper allocations to private markets, and a clearer commitment to backing UK assets.

"This is not just about better pension outcomes, it is about building a more dynamic, competitive investment ecosystem.

"Delivering long-term, sustainable growth is crucial and the City of London Corporation is delighted to have partnered with industry and Government to bring this ambition to life.”

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