Over the summer, the Government struck a landmark deal with 17 of the UK’s largest pension providers: the Mansion House Accord.
By 2030, these companies plan to invest at least 10% of the money in their default workplace pension funds into private assets. This may sound complicated, but it could affect your retirement savings soon, even if you don’t realise it.
What Is the Mansion House Accord?
The government wants to direct more of the UK’s retirement savings into fast-growing businesses and infrastructure projects to help improve the economy. Seventeen major companies, such as Aviva, Scottish Widows, Legal & General, Aegon, Phoenix, Nest, Smart Pension, M&G, and Mercer are involved. They plan to invest at least 10% of their default DC pension funds into private assets by 2030.
What are “private assets”?
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Unlisted equity: shares in companies not traded on stock exchanges.
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Private credit/debt: direct loans to businesses or projects instead of buying bonds.
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Infrastructure: assets like renewable energy projects, transport systems, or data centers.
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Commercial property: this includes offices, warehouses, and student housing.
While these investments can be exciting and sometimes produce decent returns, they are harder to value, costlier to manage, and take longer to sell than regular stock market funds.
Why Should I Care?
Higher investment risk: Private assets are illiquid and less transparent. Returns might be higher, but the range of possible outcomes widens.
Potentially higher charges: The annual fee cap on workplace pensions is 0.75%, yet most default funds currently sit well below that. Private-asset funds are costlier to run and often layer on performance fees, meaning your charges could creep up towards the cap.
No explicit consent required: If you’re in your scheme’s default fund, and c. 90 % of UK savers are, part of your money may be moved automatically. You will likely receive a letter or email, but you won’t be asked to sign anything.
Your outcome depends on performance and costs: In DC pensions, you shoulder the investment risk. Higher fees + higher risk may equal higher reward, but there are no guarantees.
What Actions Could I Take Right Now
Knowledge helps reduce financial stress. A small investment of time today can benefit you for years to come.
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Check your pension investments: Log in to your provider’s portal or find your latest statement. Look for the fund name. If it says “Default,” “Balanced,” “Managed,” or “Lifestyle,” it’s likely the standard option. If you have questions, ask your HR department or your provider directly.
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Reassess your risk tolerance: Use a free tool like the Royal London Risk Profiler or consult with us. Consider how you would feel if your pension lost 20% in one year. Does that match your investment timeline and comfort level?
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Make informed choices: If you think the potential for higher returns justifies the extra risk and cost, stay where you are. If you find lower-cost and more flexible options within the same pension plan, consider switching funds. If your current options are limited, think about transferring to a different provider or opening a separate personal pension.
Always take into account your overall financial situation and tax implications when making decisions, which is precisely where personalised advice can add real value.
How Can You Help?
At PWS Financial Consulting, we evaluate your current pensions and show where each pound is invested. We compare costs to reveal any hidden fees. We create a diverse strategy that aligns with your goals, not the government’s. We regularly review your plan to ensure you stay on track, regardless of any political changes.
If you have any questions about this, feel free to schedule a quick call or send me an email. A brief conversation now could help you avoid surprises later.
Growing the UK economy is a good goal, but your pension is meant to ensure your future lifestyle. Don’t let policy changes go on without knowing their effects. Take ten minutes this week to check your pension, reassess your risk comfort, and decide if the Mansion House Accord’s push for private assets aligns with your financial plans.
If you need advice, we’re here to help. Schedule a free, no-obligation chat here. A guide on selecting a financial advisor is also available here.
This blog is for information only and does not constitute personalised investment advice. Past performance is not a reliable indicator of future returns and the value of investments can fall as well as rise. Tax rules can change and depend on individual circumstances.
