LONDON: UK pension fund managers have agreed to invest at least 5% of their assets at home, marking a win for the Labour government that’s seeking to boost the economy by drawing billions of pounds into local startups and infrastructure projects.
Seventeen large pension providers are signing up to the voluntary commitment, which will see them invest at least 10% of defined-contribution default funds in private markets by the end of the decade, according to a statement yesterday.
Within that allocation, at least 5% of the total will be going to UK private markets, “assuming a sufficient supply of suitable investible assets,” it said.
The new deal will “unlock billions for major infrastructure, clean energy, and exciting startups – delivering growth, boosting pension pots, and giving working people greater security in retirement,” Chancellor of the Exchequer Rachel Reeves said in the statement.
The agreement comes less than two years after the original Mansion House Accord, when 11 companies committed to invest 5% of pension assets in unlisted equities, though a proposal for a specific UK allocation was dropped.
The fresh accord is set to unlock £50bil (US$66bil) of investment for UK businesses and major infrastructure projects, and assets within its scope currently amount to £252bil, according to the statement.
The Labour government , which came to power in July 2024, has been trying to deliver on its pledge to boost private investment and economic growth, and measures include a raft of reforms to the country’s fragmented pension system.
Policymakers have so far shied away from mandating pension funds to invest in UK assets. — Bloomberg
