Pensions UK has outlined practical steps to help pension schemes increase investment in UK growth assets and improve outcomes for savers.
The report, From commitment to deployment: Scaling pension fund investment in the UK economy, marks the next phase of Pensions UK’s “powering pensions” programme. It focuses on mobilising pension capital at scale through investable structures, stronger coordination across public bodies and a regulatory environment that supports long-term value.
UK pension funds already invest around £1trn (€1.2trn) in the UK across Gilts, equities, credit and alternatives. However, further growth-focused investment that works for savers will depend on the availability of more pension-grade opportunities with clear routes to market and appropriate risk-return profiles, the association said.
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.
Although some investable structures already work for pension funds, members continue to report barriers, including insufficient risk-adjusted returns, a lack of suitable opportunities and policy uncertainty.
Pensions UK said these issues could be addressed through improved pipeline visibility, risk-sharing and value-focused regulation.
The association is therefore calling on 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.
‘Diverse range’ of investable routes
The report comes a year after the Mansion House Accord, under which 17 of the UK’s largest pension providers committed to increasing investment in unlisted assets in the UK and globally. The UK government has also pledged to help build a pipeline of investable opportunities, although Pensions UK said further progress is needed.
Zoe Alexander, executive director of policy and advocacy at Pensions UK, said: “Pension schemes are already major investors in the UK, supporting economic growth – but more practical, co-ordinated action by government and agencies is needed to support their efforts to keep scaling those investments.”
She added that schemes need a “diverse range” of investable routes that are consistent with fiduciary duty and deliver good outcomes for savers.
The report was broadly welcomed by the industry.
Lorna Blyth, managing director of investment proposition at Aegon, said the provider supported the report’s focus on practical steps to boost UK growth investment.
“As a founding signatory to the Mansion House Accord, we have already deployed one-third of our [defined contribution] DC workplace private market assets in the UK, driven solely by our fiduciary duty to secure better risk-adjusted returns for members rather than by mandation,” she noted.
“We urge the government and industry to adopt pragmatic timelines and to deliver a steady pipeline of high-quality UK private market investment opportunities”
Lorna Blyth at Aegon
Blyth added that clearer regulation and access to scalable pension-grade opportunities are “vital”, but stressed that providers must retain discretion to balance risk, return and liquidity in members’ best interests.
She said: “We urge the government and industry to adopt pragmatic timelines and to deliver a steady pipeline of high-quality UK private market investment opportunities that are appropriate for the scale of pension assets.”
Focus on delivery and long-term value
Ruari Grant, head of policy and external affairs at TPT Retirement Solutions, said the focus must now shift to delivery.
He said: “That means clearer pipelines, better coordination across government and public finance institutions, and investment structures that work for schemes of different sizes and types.”
Grant added that a stronger focus on long-term value, rather than headline cost alone, will also be essential.
The report recommends exploring an IFM-style model in the UK – a platform able to originate, structure and manage long-term UK assets – which Grant said was specifically designed for DC investors and could bring significant benefits if established.
However, he noted that it remains unclear how such a model would be funded and governed in the UK’s more commercially driven DC market.
Patrick Heath-Lay, chief executive officer of People’s Pension, said the provider’s preparations for private markets investment had highlighted opportunities to deliver attractive member returns.
“We believe there is a clear opportunity to harness the power of existing public finance vehicles further and align with industry to resolve some of the current barriers. Addressing these obstacles will help to achieve the deployment of capital at both scale and pace, driving further investment into the UK economy, whilst delivering for savers,” he stated.
George Fowler, partner at Isio, said the conversation around DC pension investment in private markets has “clearly moved” on over the last 12-18 months.
He said: “The industry is now broadly aligned on the role illiquid assets can play in improving long-term member outcomes and supporting UK growth, but the focus is increasingly shifting towards implementation and delivery.”
Fowler added that execution – including manager selection, portfolio construction and liquidity management – would ultimately determine whether these allocations succeed over the long term.
“From a DC perspective, the direction of travel is clear. The challenge now is building the infrastructure, investment vehicles, and policy environment needed to support scalable long-term investment in a way that remains consistent with fiduciary duty and delivers value for savers,” he said.
