The UK government is set to inject fresh momentum into the private markets sector with a landmark initiative aimed at channeling more than £50 billion ($66.1 billion) of pension fund capital into private equity, venture capital, and infrastructure over the next five years.
Unveiled on Tuesday, the “Mansion House Accord” has been signed by 17 major workplace pension providers. The voluntary agreement commits these firms to allocate at least 10% of defined contribution (DC) pension assets—in which individual savers do not select investments—toward private market investments within five years. The initiative is expected to impact £252 billion in pension assets and could release £25 billion directly into UK-based ventures, assuming sufficient suitable opportunities are available.
The UK Treasury estimates the broader plan could unleash up to £50 billion for investments spanning startups, infrastructure, and clean energy. Backers of the Accord include leading pension providers such as Aviva, M&G, and Royal London, representing over 90% of workplace DC savers.
Although the Accord remains voluntary, reports suggest that Finance Minister Rachel Reeves is considering legislation to enforce higher allocations should funds fall short. Further regulatory guidance is expected in the Pensions Investment Review, scheduled for release later this year.
Reeves hailed the move as a “bold step to unlock billions for major infrastructure, clean energy, and exciting startups,” positioning it as part of a broader strategy to revitalize UK capital markets and retain high-growth firms domestically.
The Mansion House Accord builds on the 2023 Mansion House Compact, a similar initiative by the previous Conservative-led government, in which 11 providers pledged to allocate 5% of their DC assets to unlisted equities. According to Lord Mayor of London Alastair King, the new Accord represents a “step change in ambition—more signatories, deeper allocations to private markets, and a stronger focus on UK investments.”
He added: “If we want companies to scale in the UK, we must ensure they have the capital to do so. This is not just about better pension outcomes—it’s about building a more dynamic, competitive investment ecosystem.”
Currently, UK pension funds remain under-allocated to private markets compared to international peers. A report from New Financial noted that just 6% of UK pension assets are invested in private equity and infrastructure, compared to 34% in Canadian public sector pensions and 14% in Australian superannuation funds.
The policy comes amid a slowdown in UK private markets activity, with PitchBook’s Q1 2025 UK Market Snapshot showing a decline in venture capital and private equity deal value. Policymakers hope that a surge in domestic pension capital will help reverse this trend, support innovation, and prevent promising companies from seeking capital and listings abroad.
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