Pension reforms show the private sector is backing Britain
Seventeen major UK pension schemes have united under the Mansion House Accord to invest 10 per cent of their default funds into private markets, with half allocated to the UK, marking a bold industry-led shift toward using long-term capital to drive national growth, says Alastair King
In a landmark show of leadership, 17 of the country’s largest defined contribution (DC) pension schemes have come together under the Mansion House Accord, committing to invest 10 per cent of their default funds into private markets, half of which will be earmarked for the UK. This bold, industry-led move could unlock over £25bn for the UK economy by 2030, capital that will be deployed into major infrastructure projects, clean energy, high-growth businesses and the innovation powering our future.
This is the private sector backing Britain, and backing long-term value creation for millions of savers. The Accord builds on the momentum of 2023’s Mansion House Compact, which first saw DC pension providers agree to invest in the real economy and the UK’s scale-up ecosystem. Together, these initiatives mark a turning point in how we think about retirement savings: from passive pots chasing liquidity, to active capital fuelling national renewal.
The City of London Corporation, working in partnership with the Association of British Insurers and the Pensions and Lifetime Savings Association, is proud to help bring this vision to life. This is a major step towards a pension system that delivers better returns for savers while channelling investment into the sectors and regions where it is needed most. This is the industry coming together, collectively recognising an issue and coalescing around a solution that can deliver real impact for savers and businesses. The Accord will support the growth of UK businesses and strengthen our domestic capital markets.
The economic rationale is clear. The government has made growth its central mission and Chancellor Rachel Reeves has rightly called the financial services sector the “jewel in the crown” of the British economy. Delivering growth at scale will require more than rhetoric. It will demand long-term capital, deployed confidently into the UK’s most productive opportunities. That is exactly what the Mansion House Accord is designed to deliver.
UK pension savers are missing out
This is also about fairness. Today, 87 per cent of DC scheme members face a shortfall in retirement income, according to Aon. A UK saver can expect to retire with a pension pot 30–40 per cent smaller than a counterpart in Australia, Canada or the Netherlands. This is not acceptable. We owe it to those who save responsibly to ensure their money is working as hard.
That means rethinking outdated allocation models that overweight highly liquid, low-yield assets. Liquidity is not a virtue when the investment horizon stretches over three decades. Pensions should not sit passively in cash and bonds – they should be helping to build homes, fund life sciences breakthroughs, scale climate tech and drive innovation across the UK economy.
We must also rebuild confidence in UK public markets. Revitalising platforms like AIM which play a vital role in supporting growth companies will ensure firms can scale in Britain, not just start here. The Accord creates the conditions for this: better capital flows, deeper markets and more patient investment.
Mark Carney once warned that a post-Brexit Britain could become reliant on the “kindness of strangers” for financing. That cannot be our future. We must not be in a position where overseas funds have more confidence in UK growth than our own domestic institutions. No one is coming to save us, but we do not need saving. We need self-belief.
This is not a trade-off between growth and savers. The same investments that build national resilience also deliver long-term, value-driven returns. What is good for pension outcomes is good for Britain.
The Mansion House Accord is an important step forward, but it is only the beginning. Government has played its role. The next phase of reform must be driven by the industry, with renewed ambition and clarity of purpose. Let this be the moment we stop looking outward for answers and start investing inward with confidence.
We have the capital. We have the institutions. And now, we have the will. It is time to back ourselves.
Alastair King is Lord Mayor of the City of London