Key Takeaways
- • The UK government published the Mansion House Accord on May 13, 2025, a voluntary agreement committing 17 of the largest pension funds to allocate at least 10% of their main default Defined Contribution (DC) funds to private markets by 2030, with half required to be invested domestically in the UK.
- • The accord is expected to mobilize £50 billion of UK pension fund capital into private assets including property, infrastructure, private credit, private equity, and venture capital over the next five years.
- • The new accord represents a significant escalation from the 2023 Mansion House Compact, which required early adopters to commit only 5% to unlisted equities with no domestic allocation requirement, doubling the allocation target and adding geographic specificity.
- • Eligible private market assets include directly held or fund-based investments in property, infrastructure, private credit, private equity, venture capital, plus AIM and Aquis Growth Market shares; UK assets are defined by company registration, asset location, or borrower location depending on asset class.
- • The accord is designed to enhance financial outcomes for DC pension savers by providing access to higher potential net returns available through diversified private market exposure while supporting broader UK economic development.
Summary
The UK government has intensified its push to redirect defined contribution pension savings into private capital markets through the publication of the Mansion House Accord on May 13, 2025. This voluntary industry-led initiative represents a substantial escalation of the government's 2023 Mansion House Compact, bringing together 17 of Britain's largest pension funds under a unified commitment to reshape pension fund allocation strategies.
The accord's core commitment is ambitious: participating pension funds pledge to invest at least 10% of their main default DC funds in private markets by 2030, with a requirement that 50% of these allocations flow into UK-registered or UK-located assets. This coordinated effort is projected to channel £50 billion of pension capital into a diversified range of private assets over five years, spanning property, infrastructure, private credit, private equity, and venture capital. The asset scope also includes publicly listed but less liquid instruments such as shares traded on AIM and Aquis Growth Market.
The scale and scope of the Mansion House Accord far exceeds its predecessor. Under the 2023 Mansion House Compact, early adopters committed to just 5% allocation to unlisted equities with no domestic investment requirement. The new accord doubles the allocation percentage and adds explicit geographic targeting, reflecting heightened policy ambition to simultaneously boost pension returns and redirect capital toward domestic economic growth priorities.
The accord establishes clear definitional parameters for eligible assets. Equity-based investments qualify when directed to UK-registered private companies or partnerships. Infrastructure and property assets meet the UK definition if physically located within the United Kingdom. For private credit and debt instruments, UK-sourced qualification requires the underlying borrowers to be UK-located entities. This framework addresses practical implementation challenges while ensuring transparency across the 17 signatory pension funds.
The initiative is grounded in a dual-objective rationale: delivering enhanced financial outcomes for DC savers through exposure to higher potential net returns available in private markets, while simultaneously mobilizing capital to support UK economic development priorities. As a voluntary agreement rather than a regulatory mandate, the accord relies on institutional commitment and market incentives to drive compliance and capital reallocation across Britain's pension fund landscape.
The accord's core commitment is ambitious: participating pension funds pledge to invest at least 10% of their main default DC funds in private markets by 2030, with a requirement that 50% of these allocations flow into UK-registered or UK-located assets. This coordinated effort is projected to channel £50 billion of pension capital into a diversified range of private assets over five years, spanning property, infrastructure, private credit, private equity, and venture capital. The asset scope also includes publicly listed but less liquid instruments such as shares traded on AIM and Aquis Growth Market.
The scale and scope of the Mansion House Accord far exceeds its predecessor. Under the 2023 Mansion House Compact, early adopters committed to just 5% allocation to unlisted equities with no domestic investment requirement. The new accord doubles the allocation percentage and adds explicit geographic targeting, reflecting heightened policy ambition to simultaneously boost pension returns and redirect capital toward domestic economic growth priorities.
The accord establishes clear definitional parameters for eligible assets. Equity-based investments qualify when directed to UK-registered private companies or partnerships. Infrastructure and property assets meet the UK definition if physically located within the United Kingdom. For private credit and debt instruments, UK-sourced qualification requires the underlying borrowers to be UK-located entities. This framework addresses practical implementation challenges while ensuring transparency across the 17 signatory pension funds.
The initiative is grounded in a dual-objective rationale: delivering enhanced financial outcomes for DC savers through exposure to higher potential net returns available in private markets, while simultaneously mobilizing capital to support UK economic development priorities. As a voluntary agreement rather than a regulatory mandate, the accord relies on institutional commitment and market incentives to drive compliance and capital reallocation across Britain's pension fund landscape.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.