Seventeen UK pension managers have committed to boosting their allocation to UK assets as part of the Mansion House accord.
The Mansion House accord will see signatories allocate 10% of defined contribution pots to private markets, with 5% of the assets to UK private markets, which would include London’s AIM.
The pledge could see £50bn pumped into UK assets in the coming years.
“This is a major opportunity for the pension and investment industry to support UK growth while delivering improved outcomes for pension savers,” said Amanda Blanc DBE, Aviva Group Chief Executive Officer.
In addition to helping promote the UK’s growth prospects, the accord will also provide pension savers access to markets that have the potential to boost returns over the long term and provide a greater level of diversification.
“These reforms give pension savers wider access to asset classes previously only available to institutions and intermediaries. Private assets can act as a key diversifier in long-term portfolios with the ability to boost people’s retirement incomes alongside the UK economy,” said Helen Morrissey, head of retirement analysis, Hargreaves Lansdown.
“However, for these reforms to work it is vital providers are given the flexibility to implement changes as the best opportunities present themselves rather than to a specific timetable. This is in line with the pension industry’s role to always secure the best outcomes for its members. With this in mind it is positive to see the pledge that government and regulators must support the industry in securing a pipeline of suitable UK investment opportunities for schemes to invest in.”
The seventeen signatures from pension managers will be seen as a big win by Chancellor Rachel Reeves, who is desperately trying to rejuvenate the UK’s investability. Support from domestic pension funds may help draw in overseas capital and lead to more companies choosing London as their destination for a listing.