Speaking at last week’s Mansion House conference Connecting capital: Workplace pensions and UK growth, pensions minister Torsten Bell has shifted the focus from providers by urging employers to take greater responsibility for pension outcomes and productive investment, stressing that workplace pension scheme selection plays an important role in both retirement adequacy and UK economic growth.
But the minister has not entirely left out providers, as he has said the most immediate task is to deliver on commitments to scale.
The government wants to consolidate the UK pension market into pension “megafunds” under the Pension Schemes Act 2026, which will require pension schemes to have £25bn in a main scale default fund by 2030.
Pension funds that do not hold at least £10bn by 2030, and are on the path to reach £25bn by 2035, will have to consolidate.
Earlier last month, the UK pensions industry broadly backed the government’s plans to increase scale in workplace defined contribution (DC) pension funds, but urged ministers to avoid a rigid framework that could restrict investment choice and innovation.
Specifically, Emma Furlonger, managing director of workplace and retail intermediary at Standard Life, warned that it was essential that the introduction of a Main Scale Default Arrangement (MSDA) framework focuses on the outcomes being delivered for members rather than prescribing a single investment approach.
“As investment strategies evolve, providers must retain enough flexibility to meet common investment objectives through different structures and products where this is in savers’ best interests.”
Emma Furlonger, Standard Life
Additionally, she said regulations should recognise that scale can already be achieved through shared investment capabilities, governance frameworks and underlying investment building blocks rather than identical fund structures or asset allocations.
She said this will help avoid unnecessary fund mergers or member movements that do not improve outcomes.
To help the growth agenda, the Pensions Regulator (TPR) has pledged to support industry initiatives that help remove barriers and improve access to suitable investment opportunities.
The pledge came as the regulator’s report found that pension funds are interested in investing in private market assets where it is in their members’ interest. However, the engagement with more than 40 stakeholders across pensions and investment industries showed that barriers persist, preventing schemes from investing capital at the pace and scale they could while continuing to deliver good outcomes for members.
A separate research study from Standard Life and WPI Economics found that DC pension schemes could invest between £40bn and £200bn in UK private markets by 2035 as consolidation creates larger schemes with greater capacity to diversify.
Mansion House commitments
Earlier last month, NEST confirmed it had met the 5% unlisted equity target under the Mansion House Compact and the 10% private markets target under the Mansion House Accord. At the UK Private Capital Pensions Summit on 9 September, chief investment officer Liz Fernando said the master trust had also met the Accord’s requirement for 5% to be invested in the UK.
NEST has “about 20% in private markets today” and “about 5% in private equity”, she said. The remaining allocation is “fairly broadly” spread across real estate, infrastructure and private credit, as well as a “small but growing” timber allocation.
Fernando also called out other signatories for lagging. She said: “[…] I do think that some people signed those Compact or Accord [commitments] because it was the right thing to do and there was a lot of political noise about getting money to work in this space, and the ‘mandation’ thing was looming over one shoulder. So signing was a political expedient thing to do. People now need to start moving.”
Pensions risk transfer
In other news, in the first half of the year, the UK saw 135 pension risk transfer (PRT) deals with a total value of £10.2bn, compared to 160 transactions the previous year with a total value of £9.7bn. Pension funds with total assets below £100m continued to account for a high proportion of transactions (82%).
Rothesay led the market, writing £2.8bn across 14 transactions and taking a 28% share following the launch of Radius, its small scheme offering.
Rothesay has taken the number one spot from Legal & General (L&G), which dominated the market in 2025 with a 27% market share. L&G is now in the number two spot with £1.9bn and an 18% market share, followed by Standard Life with £1.6bn and a 16% market share, and Aviva with £1.1bn and an 11% market share.
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
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