Only one in five UK master trusts allocate more than 5% of default assets to private markets, despite around 60% having some exposure to the asset class, according to analysis by The Pensions Regulator (TPR).
TPR examined asset allocation across 25 defined contribution (DC) master trusts during the accumulation phase as at 31 December, covering £207.7bn of assets, or 74% of total master trust assets.
The analysis found that public markets continue to dominate default investment strategies, with equities and bonds accounting for 88% of assets.
Equities represent £136bn, or 65% of default assets, with listed developed market equities accounting for the largest allocation. Most equity investments are in non-UK listed markets. The median equity allocation across master trusts is 69%, with relatively little variation between master trusts.
Bonds account for £46.2bn, equivalent to 22% of default assets.
As members approach retirement, asset allocation shifts from growth to lower-risk investments, with equity allocations falling from 77% 30 years before retirement to 26% at retirement, while bond allocations increase from 13% to 56%.
Although around 60% of master trusts have some exposure to private markets, representing £5.3bn of assets, only 20% allocate more than 5% to the asset class. Around 2% of assets are invested in UK private markets.
Overall, non-UK investments account for 84.5% of disclosed default assets, while UK investments represent 15.5%.
UK unlisted private market investments account for 2.6% of disclosed default assets, while total unlisted investments account for 6.1%.
The analysis comes as the occupational DC market expanded by 22% in assets and 7% in membership during 2025. Master trusts now account for more than 83% of DC assets and 92% of memberships.
Earlier this month, a report from Howden Employee Benefits found that master trusts account for 41% of large DC schemes, up from less than 30% in 2022, driven by the UK government’s consolidation agenda.
TPR said it collected the data to establish a baseline for monitoring investment trends across master trusts and to improve transparency around default asset allocation.
Richard Knox, TPR’s executive director of strategy, policy and analysis, said: “TPR does not tell schemes how to invest but we do challenge all schemes to deliver value for money. We want to see well-governed schemes confidently considering a broader range of investments, with potential to improve returns for members.
“We expect trustees and administrators to review their strategy, governance arrangements and diversification in line with our private market guidance. Where schemes cannot demonstrate value, trustees should consider consolidation in members’ interests.”
