POLL: Do you trust Rachel Reeves with your pension? | Personal Finance | Finance
Seventeen major pension providers have pledged to invest tens of billions into UK infrastructure and businesses under a new initiative welcomed by Chancellor Rachel Reeves.
The voluntary agreement – an expansion of the Mansion House Compact – commits signatories to allocate at least 10% of their defined contribution (DC) default funds to private markets by 2030. Of that, a minimum of 5% must be invested in UK assets, provided suitable opportunities are available. The move is expected to unlock at least £25 billion for the UK economy by the end of the decade, with some providers indicating they may exceed the target.
Ms Reeves said the initiative would help British start-ups and high-growth firms access the capital they need to scale, while also aiming to improve returns for savers.
The so-called Mansion House Accord builds on the Compact signed in July 2023, which saw 11 pension schemes commit to investing 5% of their DC defaults in unlisted equities such as venture capital and growth equity.
The latest agreement covers £252billion in assets, based on current holdings – a figure expected to grow over time. The signatories 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).
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Ms Reeves said: “I welcome this bold step by some of our biggest pension funds, which will unlock billions for major infrastructure, clean energy and exciting start-ups — delivering growth, boosting pension pots and giving working people greater security in retirement.”
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’s decision to invest in more productive assets, from growing companies to infrastructure. This supports better outcomes for savers and faster growth for Britain.”
However, Tory Shadow Chancellor Mel Stride claimed the idea smacked of “desperation”. He told the Financial Times: “Pension funds must be free to make investment decisions based on what’s best for savers.”
Scottish Widows, the pension arm of Lloyds Bank, has refused to sign the deal. Chirantan Barua, Scottish Widows’ chief executive, said that investment decisions would be guided solely by returns instead of geography, the Telegraph reports. He said: “We will continue this investment approach to support our communities where it generates strong returns for pensioners.”
