‘More Action Needed’ to Keep Pension Schemes Invested in UK

Why It Matters

Unlocking additional pension capital for UK growth assets could accelerate economic expansion while delivering higher risk‑adjusted returns for savers. The recommendations target systemic bottlenecks that, if resolved, would make pension funds a more reliable source of long‑term financing.

Key Takeaways

• UK pensions hold ~£1 trn (~$1.25 trn) in domestic assets
• Mansion House Accord signatories increased private‑market exposure but pipeline remains thin
• Fragmented system and policy uncertainty hinder pension‑grade investment opportunities
• Risk‑sharing tools and clearer regulation could unlock long‑term growth assets
• Coordinated government action needed to create end‑to‑end investment pathways

Pulse Analysis

Pension funds are already the UK’s largest institutional investors, with roughly $1.25 trillion deployed across equities, bonds and private markets. Their capital underpins infrastructure projects, tech start‑ups and sustainable ventures, making them a critical engine for long‑term growth. Yet the sector’s potential remains under‑leveraged because many schemes lack clear, pension‑grade opportunities that meet fiduciary standards while delivering attractive risk‑adjusted returns.

The 2023 Mansion House Accord marked a voluntary commitment by 17 top pension providers to increase allocations to unlisted assets, both domestically and abroad. Early results show a modest shift, exemplified by Aegon’s one‑third deployment of DC private‑market assets in the UK. However, the Pensions UK report highlights persistent fragmentation: unclear coordination among regulators, limited pipeline visibility, and policy volatility continue to deter deeper exposure. Without a cohesive framework, schemes struggle to meet both growth ambitions and fiduciary duties.

To bridge the gap, the report urges a multi‑pronged approach: enhance pipeline transparency, introduce risk‑sharing instruments such as guarantee funds, and recalibrate regulation to prioritize long‑term value over short‑term cost. Coordinated government action—streamlining approvals, supporting public‑finance institutions, and fostering industry collaboration—could create a seamless conduit for pension capital into high‑quality UK projects. If implemented, these steps would not only boost returns for retirees but also reinforce the UK’s competitive edge in innovation and sustainable development.