IPE UK Briefing: Fidelity and L&G see each default fund reach £25bn AUM

In May, two pension providers, Fidelity and L&G, each announced their default funds reached £25bn in total assets.

This means the Fidelity FutureWise and L&G’s Lifetime Advantage Funds have already reached the scale envisaged under the UK government’s consolidation agenda, set out in the 2026 Pension Schemes Act, which calls for all defined contribution (DC) multi-employer schemes to operate a main default fund with at least £25bn in assets by 2030.

The scale requirement is driven by the UK government’s desire to unlock billions in domestic investment, which is set out in the Act. Pension providers have also committed to increasing domestic investment under voluntary agreements – Mansion House Compact and Mansion House Accord.

Accord anniversary

Under the Mansion House Accord, which turned one year old last month, pension providers pledged to invest at least 10% of their DC default funds in private markets by 2030, with 5% of the total allocated to the UK.

Ahead of the anniversary, James Ashton, chief executive officer of Quoted Companies Alliance (QCA), wrote to the Accord signatories to highlight that small-cap companies have not yet felt the positive impact from the voluntary initiative. In the letter, Ashton asked pension providers what they have done in the last year to explore junior stock markets opportunities in the UK, what, if anything, is stopping them from investing, and what the QCA can do to help.

Pensions UK has, meanwhile, outlined practical steps to help pension schemes increase investment in UK growth assets and improve outcomes for savers. The association said that despite significant policy activity, schemes still face a fragmented landscape with unclear coordination, accountability and routes to investing in UK growth assets.

While the British Business Bank has made progress in creating investable routes, including through the British Growth Partnership, other institutions need to do more, Pensions UK argued.

The association called on the government, regulators, public finance institutions and the pensions industry to provide clearer end-to-end pathways linking pension capital to investable UK opportunities. This would require coordinated policy action, scalable investment vehicles and regulation that prioritises value alongside cost.

Venture capital commitment

While more needs to be done, there is some progress on the Mansion House commitments. In May, the British Business Bank committed £40m to Lansdowne Capital’s latest fund as part of a £111m first close. Joining the funding round were also Aviva Investors and Lloyds Banking Group, with an undisclosed commitment.

The fund will identify high-potential UK companies emerging from the UK’s world-class research base and wider startup ecosystem, supporting them at key value inflection points as they scale up. It will invest across a range of sectors, including healthcare data, quantum computing, natural capital, advanced materials, semiconductors, and defence technology.

It aligns closely with two of the British Business Bank’s core strategic objectives, both increasing the availability of scale-up capital and mobilising institutional capital into the UK’s innovation economy. 

Pensions Commission urged to be brave

The Pensions Commission published its interim report on the state of retirement saving in the UK, highlighting that many people are not saving enough for retirement, particularly low and middle earners, the self-employed and women. Without action, the Commission warned, the number of people undersaving for retirement could rise from 15 million to 19 million, leaving large groups across the UK facing a “severe cliff-edge when they retire”.

While the Commission did not highlight anything that the industry did not already know, it was urged to be “brave” in its final recommendations to address pensions adequacy, with commentators warning that “too much time” has already been spent diagnosing the same problems.

The government has already ruled out changes to automatic enrolment contribution rates during the current Parliament, which is in place until 2029.

LTAF launch

Elsewhere, BlackRock launched a diversified alternative strategies long-term asset fund (LTAF) to broaden DC pension access to private markets. The move is designed to enhance long-term retirement outcomes by complementing public market exposures with assets such as infrastructure, private equity and real estate, and reflects continued momentum across UK workplace pensions to incorporate suitable long-term, less liquid assets into DC default schemes. 

The LTAF has been seeded by two anchor investments – the BlackRock UK Retirement Savings Plan and the UK pension scheme of another global financial services firm.

BlackRock was among the first to launch LTAFs for UK DC schemes, with structures engineered to meet operational, liquidity, valuation and pricing standards required in DC plans. The new LTAF reflects learnings from global private market programmes and is calibrated specifically for UK DC pension needs.

Items to note:

• The IPE Conference & Awards 2026 is taking place on 2 December at the Royal College of Physicians & Natural History Museum in London.

Pamela Kokoszka

UK Correspondent