Pension schemes and providers have jointly formed the Mansion House Accord initiative, pledging to ramp up investment into private British businesses.
The agreement, stemming from former chancellor Jeremy Hunt’s Mansion House reforms, will see the Pensions and Lifetime Savings Association, the Association of British Insurers and the City of London Corporation jointly scale up the allocation of funds to high-growth investments.
Under the Accord, 17 participating groups will allocate a minimum of 10% of defined contribution default funds to the private markets, with at least half going to UK firms by 2030.
The Mansion House Accord expands the existing Mansion House Compact from 2023 that saw 11 providers pledge 5% of their defined contribution default funds to private equity and venture capital.
Signatories of the compact currently hold almost £800m of unlisted equity assets in their defined contribution default funds, equivalent to 0.36% of the total value of those funds, according to the British Private Equity and Venture Capital Association (BVCA).
The additional capital dedicated to UK private firms will significantly boost the amount of funding available for startups, broadening private companies’ options as the government looks to improve the fortunes of the tech industry.
“This agreement could be a huge step forward for the UK economy if the signatories follow through on their commitments,” said BVCA chief executive Michael Moore.
“Right now, it is primarily overseas pension savers’ retirement funds that are benefitting from breakthroughs made by innovative British companies. UK venture and growth funds support the development of fast-growing British companies operating in sectors of the future such as life sciences, AI and net zero.
“That is why we value the assurances of the signatories that the Accord, whilst expanding their focus to new areas such as infrastructure, maintains the pension industry’s resolve to increase investment in UK venture and growth equity funds.”
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