Key Takeaways
- • UK pension scheme allocations to private markets have nearly tripled since 2019, rising from 9% to 26%, according to the Pensions Management Institute's latest Private Markets Industry Guide published December 1, 2025.
- • "Productive finance" investments—encompassing infrastructure, property, private equity, energy, and transport—now represent 16% of private defined benefit assets, with £119bn deployed in property and alternative strategies alone.
- • Trustees face heightened governance demands and regulatory scrutiny, with regulators expecting evidence-based investment decisions and deeper risk analysis rather than discretionary positioning in private markets.
- • The shift represents a fundamental strategic recalibration driven by regulatory pressure, yield-seeking behavior, and the need for long-term, inflation-resistant returns—not a marginal portfolio adjustment.
- • PMI warns that pension trustees can no longer treat private markets as niche exposure and must develop new technical expertise and governance capabilities to manage complexity and member outcome risks.
Summary
The Pensions Management Institute has sounded a formal warning that UK pension trustees must rapidly upskill as private market allocations have surged to unprecedented levels. The PMI's latest Private Markets Industry Guide reveals that allocations across UK schemes have nearly tripled over six years, expanding from 9% in 2019 to 26% as of December 2025. This acceleration signals a structural shift in how defined benefit schemes are managing long-term liabilities and seeking returns in a lower-yield environment.
The composition of these allocations underscores the breadth of private market exposure now embedded in pension portfolios. "Productive finance" investments—including infrastructure, property, private equity, energy, and transport assets—account for 16% of private defined benefit assets. The PMI quantified significant capital deployment, citing £119bn invested specifically in property and alternative strategies. This scale of exposure means private markets have migrated from a specialized, peripheral component of pension strategy to a central pillar of asset allocation philosophy.
Helen Forrest Hall, chief strategy officer at the PMI, emphasized that trustees can no longer treat private markets as marginal positioning. She warned that schemes now face demanding questions on asset access, governance structures, and member outcomes. Regulators, she noted, expect evidence-backed decisions grounded in rigorous analysis, not discretionary allocation choices. This regulatory expectation marks a critical governance threshold: trustees must demonstrate clear rationale for private market commitments and articulate how these holdings serve scheme-specific objectives.
Scott Foster, head of digital and governance solutions at CACEIS, characterized the shift as a "fundamental recalibration" rather than incremental adjustment. He attributed the movement to converging pressures: regulatory and policy mandates, the competitive hunt for yield in fixed-income constrained markets, and the strategic need for inflation-resistant, long-duration assets aligned with pension liabilities. These drivers indicate the private markets surge is structural, not cyclical.
The PMI's warning underscores a critical gap: while allocations have expanded rapidly, trustee capability has not kept pace. The institute is signaling that boards require deeper expertise in private asset valuation, liquidity management, operational oversight, and risk mitigation specific to illiquid strategies. Without this upskilling, trustees risk governance failures, member communication breakdowns, and regulatory enforcement action—making the PMI's guidance a material compliance alert for UK pension decision-makers.
The composition of these allocations underscores the breadth of private market exposure now embedded in pension portfolios. "Productive finance" investments—including infrastructure, property, private equity, energy, and transport assets—account for 16% of private defined benefit assets. The PMI quantified significant capital deployment, citing £119bn invested specifically in property and alternative strategies. This scale of exposure means private markets have migrated from a specialized, peripheral component of pension strategy to a central pillar of asset allocation philosophy.
Helen Forrest Hall, chief strategy officer at the PMI, emphasized that trustees can no longer treat private markets as marginal positioning. She warned that schemes now face demanding questions on asset access, governance structures, and member outcomes. Regulators, she noted, expect evidence-backed decisions grounded in rigorous analysis, not discretionary allocation choices. This regulatory expectation marks a critical governance threshold: trustees must demonstrate clear rationale for private market commitments and articulate how these holdings serve scheme-specific objectives.
Scott Foster, head of digital and governance solutions at CACEIS, characterized the shift as a "fundamental recalibration" rather than incremental adjustment. He attributed the movement to converging pressures: regulatory and policy mandates, the competitive hunt for yield in fixed-income constrained markets, and the strategic need for inflation-resistant, long-duration assets aligned with pension liabilities. These drivers indicate the private markets surge is structural, not cyclical.
The PMI's warning underscores a critical gap: while allocations have expanded rapidly, trustee capability has not kept pace. The institute is signaling that boards require deeper expertise in private asset valuation, liquidity management, operational oversight, and risk mitigation specific to illiquid strategies. Without this upskilling, trustees risk governance failures, member communication breakdowns, and regulatory enforcement action—making the PMI's guidance a material compliance alert for UK pension decision-makers.
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