Chancellor Rachel Reeves's overhaul of the pension system continues with multiple firms signalling their commitment to the Labour Government's reforms.
Seventeen of the UK's largest workplace pension providers have committed to a new voluntary initiative known as the Mansion House Accord.
The agreement will see these providers invest at least 10 per cent of their defined contribution default funds in private markets by 2030.
Half of this allocation, representing five per cent of the total, will be directed specifically to UK investments. The initiative has been jointly led by the Association of British Insurers, the Pensions and Lifetime Savings Association and the City of London Corporation.
Rachel Reeves is making drastic changes to the pension system
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It aims to secure better financial outcomes for pension savers through the higher potential returns available in private markets. The Accord also seeks to boost investment in the UK economy, supporting growth and development across the country.
The signatories include major financial institutions such as Aegon UK, Aviva, Legal & General, Nest, Royal London and the Universities Superannuation Scheme.
Other providers joining the initiative are Aon, LifeSight, M&G, Mercer, NatWest Cushon, now:pensions, Phoenix Group, Smart Pension, the People's Pension, SEI and TPT Retirement Solutions.
Based on current investment holdings, the total pension assets covered by the agreement amount to £252billion. This figure is expected to increase over the lifetime of the Accord as pension funds grow.
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Britons are looking for better returns on their pension savings
GETTYThe Mansion House Accord builds upon rather than replaces the Mansion House Compact signed in July 2023. The earlier Compact saw 11 UK pension providers commit to investing five per cent of defined contribution defaults in unlisted equities by 2030.
For providers signed up to both initiatives, progress under the Compact counts towards meeting the Accord's goals. Together, these agreements represent a staged, voluntary roadmap for reform, supported by Government but driven by industry.
Barriers to investing in private assets have reduced in recent years thanks to legislative and regulatory reforms. However, further progress is needed, with the Accord making clear that Government and regulators will be integral to supporting the industry.
This includes securing a pipeline of UK investment opportunities and facilitating the Value for Money framework.
Chancellor Rachel Reeves welcomed the initiative, saying: "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."
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Labour pension minister Torsten Bell has hailed the reforms
GETTYPensions Minister Torsten Bell also expressed strong support for the Accord. "Pensions matter hugely, they underpin not just the retirements we all look forward to, but the investment our future prosperity depends on," he said.
"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."
Yvonne Braun, the director of Policy, Long-Term Savings, Health and Protection at the ABI, shared: "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."
