Your Pension: Who’s Really Making the Investment Decisions?
The UK Government is increasingly taking an active interest in the investment strategies, or lack thereof, of pension funds across the country.
Government’s Tightening Financial Stance
As highlighted by March’s Spring Statement, the Government’s finances are in a challenging and precarious state. The precise boundaries of this financial constraint may become clearer with the results of the latest three-year Spending Review, anticipated on June 11th.
The Origin of the Mansion House Compact
Financial pressures were also evident under the previous government. This led the former Chancellor, Jeremy Hunt, to introduce the Mansion House Compact in July 2023. This initiative saw eleven major workplace pension providers commit to investing 5% of their default workplace funds into private company shares by 2030. Mr. Hunt’s objective was to channel private capital towards supporting small UK businesses, thereby reducing the need for direct government intervention through tax incentives or subsidised loans.
The Evolution to the Mansion House Accord
Rachel Reeves, the current Chancellor, echoed similar sentiments regarding directing pension fund capital towards UK investment during her first Mansion House Speech in November of last year. In May 2025, she officially launched the ‘Mansion House Accord,’ building upon the foundation laid by the previous ‘Compact.’
Key Commitments of the New Accord
Seventeen prominent pension providers, collectively representing approximately 90% of active savers’ defined contribution (DC) pensions, signed up to the new Accord. Their agreement includes significant commitments:
- 10% Private Asset Investment by 2030: Signatories have pledged to invest 10% of their workplace pension portfolios into “private assets.” This broad category encompasses unlisted company shares, property, infrastructure, and private debt.
- UK Ringfence: Crucially, at least half of these private portfolios are to be ringfenced specifically for investment within the UK. The Treasury estimates this could unlock up to £25 billion in assets by 2030.
The Prospect of Mandatory Investment
Currently, the Accord remains a voluntary agreement. However, when questioned about potentially making the 10% and 5% private investment levels mandatory, the Chancellor’s response was a non-committal “Never say never.” This has led to some apprehension among investment managers, who worry that mandatory requirements could be introduced in the future. The current agreement does offer some flexibility, for example, by expecting the government to “facilitate” a pipeline of suitable UK investment opportunities.
Reviewing Your Pension’s Investment Strategy
In practical terms, achieving these private asset targets is likely to primarily involve investments made by default funds. These are the funds into which most pension contributions flow when savers do not actively select another specific fund. If your pension is currently invested in a default fund, it might be an opportune time to reassess your choice. It’s important to consider whether your pension’s investment strategy aligns with your personal financial goals, rather than exclusively with broader government objectives.
For tailored investment advice that focuses on your individual financial goals and preferences, contact Chartwell Wealth Management today. One of our expert advisors will be in touch.
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