DC pension providers invest £11bn in UK

Defined contribution (DC) pension providers have invested more than £22 billion in private markets, with over half of this amount, £11.1 billion, allocated to the UK, according to new data from the Association of British Insurers (ABI) and Pensions UK.

The 17 signatories to the Mansion House Accord, launched in May last year, have allocated 6.6% of total DC growth-phase assets to private markets as of 31 December 2025.

The agreement obligates these firms to ensure that at least 10% of their growth-phase portfolios are allocated to private markets by 2030, with half of that total earmarked for UK-based investments, provided legal and regulatory constraints allow.

UK Investments

Out of the £11.1 billion currently invested domestically, roughly 72% is funneled into property and real estate, covering both social and affordable housing projects.

In addition to the £11.1 billion figure, the signatories had committed an additional £3 billion to UK private markets at the start of 2026.

The ABI and Pensions UK emphasized in a shared statement that the 17 signatories are progressing at varying speeds, with some expanding their teams, others exploring new asset classes, and a few launching fresh investment strategies.

The industry groups stressed that maintaining a reliable flow of investable opportunities is critical as pension funds expand, warning that the UK’s supply of suitable private market investments must be actively developed.

Private Equity Investments

Nest, the UK’s largest defined contribution master trust, has expanded its private equity holdings to exceed 5% of its total assets, including a £2 billion partnership with HarbourVest.

Elizabeth Fernando, Nest Invest’s chief investment officer, described private equity as a cornerstone of their strategy to diversify holdings and generate strong, risk-adjusted returns for members.

Elizabeth Fernando noted that Nest has steadily increased its commitments to the private equity mandate managed by HarbourVest, giving its members access to investment opportunities beyond public markets.

The mandate has backed innovative UK-based companies, such as fintech firm 9fin and Citation, alongside international ventures, to support long-term growth.

Fernando noted that as these companies expand, Nest’s members will benefit from shared value creation and improved returns, aligning with the trust’s long-term objectives.

Yvonne Braun, the ABI’s director for long-term savings and health policy, stated that the latest figures confirm the sector’s progress in boosting private market investments to enhance retirement outcomes for savers.

However, Braun added that there can be no room for complacency, and sustaining this momentum will depend on a strong pipeline of investable opportunities and a shift towards long-term value for savers.

Zoe Alexander, chief policy officer at Pensions UK, noted that unlocking further potential at scale for the industry depends on a strong pipeline of suitable UK investments, with decisions made in pension savers’ best interests.

The ABI and Pensions UK also provided an update on the Mansion House Compact, which committed signatories to invest 5% of DC default funds in private equity, with unlisted equity investment in DC default funds growing by 65% in the 10 months to the end of last year.

Despite this growth, Michael Moore, chief executive of the private equity trade body UK Private Capital, said it was disappointing that new investment in unlisted markets had been limited.

Moore called for the government to remain focused on the significant risk of missed opportunities for pension savers to get better returns and for British scale-ups to access the capital they need to grow.

The total invested in private equity reached £7.5 billion, with Moore noting that there is a lot of work being undertaken by the pensions industry to facilitate more investment into private capital.

Investment Opportunities

Government support is needed to overcome regulatory barriers, and a greater focus on the overall value investments can deliver for savers rather than cost alone, according to the ABI and Pensions UK.

Elements of the Value for Money framework should help create the conditions to further accelerate private market investment in future, said Zoe Alexander, chief policy officer at Pensions UK.

Better co-ordination between government and public finance organisations is also necessary, Alexander added, to unlock further potential at scale for the industry.

Long-term Investment

Ian Cornelius, CEO of Nest, said that a strong UK economy and stronger pensions can go hand in hand when investment decisions are driven by members’ interests.