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Mansion House Accord: How it impacts your pension
The Mansion House Accord is an agreement between major pension providers to pour billions of investment back into the UK economy, instead of finding opportunities abroad.
Leading pension providers have announced a new agreement, dubbed the ‘Mansion House Accord’ to channel significant amounts of cash into UK investments.
The agreement could reshape how pension funds are allocated, affecting retirement savings for many.
Below is an overview of the Mansion House Accord and its implications for your pension.
What is the Mansion House Accord?
The Mansion House Accord is a voluntary commitment between the Government and 17 prominent pension providers.
Under this agreement, these providers will allocate 5% of their members’ pension funds to unlisted UK investments – those not traded on public stock exchanges – by 2030.
The Government estimates this could unlock approximately £25 billion for UK-based projects.
Additionally, up to 10% of pension capital will be directed toward infrastructure, property, and private equity investments, which may include both UK and international opportunities.
This shift could mobilise up to £50 billion into assets typically inaccessible through mainstream pension funds.
The accord applies exclusively to defined contribution (DC) pension schemes, which are common in workplace pensions. It does not affect defined benefit (DB) or final salary schemes. While most major providers have joined the accord, some notable firms, like Scottish Widows, have not signed on.
How does this affect your pension?
The accord will influence the ‘default funds’ offered by pension providers. These are broad, long-term investment options designed to suit most members but not customised for individual needs.
When you join a company pension scheme – usually at the start of a new employment – your pension will likely be automatically invested in the pension provider’s default fund.
If your workplace pension is with a provider signed up to the accord, your savings may be increasingly invested in UK-based projects, such as infrastructure or private equity.
This shift has sparked some concerns. Investments in unlisted assets or UK-focused projects may carry higher risks or deliver lower returns compared to global opportunities.
Historically, pension funds have favoured international investments due to their stronger returns, often bypassing UK assets seen as less attractive.
The Government’s push to prioritise domestic investments is a step back toward ‘financial repression’: a strategy where capital is constrained to local markets, potentially limiting growth due to weaker domestic opportunities or inflationary pressures.
This approach was common in the post-World War II era but largely phased out by the 1970s.
However, there is no mandate forcing pensions into UK investments at this stage. The accord reflects growing Government enthusiasm for keeping capital within the UK, but it remains voluntary for now.
Photo credits: Pexels
