The Mansion House Accord: Reinvigorating UK Investment or Merely Rebadging the Status Quo?

In July 2023, the United Kingdom government launched the Mansion House Compact, a voluntary commitment by nine of the country’s largest defined contribution (DC) pension schemes to invest at least 5% of their default funds in unlisted equities by 2030. Its successor, the Mansion House Accord, announced in May 2025, broadened the scope and ambition of this initiative. Seventeen pension providers pledged to invest 10% of their default DC assets into private markets by the end of the decade, with half of that amount—effectively 5% of total assets—allocated to UK-based investments. According to official government estimates, this could result in up to £25 billion of fresh capital directed towards UK companies and infrastructure by 2030.

The goal is clear: address the prolonged underinvestment in British enterprise and rebuild a domestic equity culture that has eroded over the past two decades. In 2001, over half of UK pension assets were allocated to UK equities; by 2022, this figure had collapsed to less than 4%. This dislocation is more than symbolic. It reflects how the UK, despite being capital-rich, channels its pension savings abroad while local start-ups, growth companies, and critical infrastructure struggle to access long-term capital.

The political symbolism of the Accord is powerful, but critics are quick to question whether it can deliver practical results. A primary weakness lies in its voluntarism. The commitments are non-binding, leaving signatories free to express support without legally enforceable obligations. This raises questions about the credibility of projected capital flows. Implementation depends not only on trustees’ willingness to invest in UK private markets but also on their interpretation of fiduciary duties and risk management.

This fiduciary constraint is not trivial. Pension trustees in the UK are legally obliged to act in the best financial interests of their members. Over the past two decades, that has typically meant maximising risk-adjusted returns via global diversification, particularly into highly liquid asset classes such as U.S. equities or government bonds. Asking trustees to override this risk-return calculus in favour of patriotic investment goals—however well-meaning—is a significant ask. The Accord suggests that investing in private markets can provide superior returns. While this is often true over long horizons, especially for large funds with in-house expertise, the empirical record for smaller UK schemes is mixed at best.

Other countries are frequently invoked as models. Australia’s superannuation funds, Canada’s major pension plans like the Ontario Teachers’ Pension Plan, and sovereign funds such as Norway’s Government Pension Fund Global all allocate substantial capital to domestic infrastructure and private equity. But these examples benefit from scale, professionalised governance, and often semi-sovereign status. CalPERS—the California Public Employees’ Retirement System—allocated over $52 billion to private equity by 2024, comprising 13% of its total portfolio (CalPERS). Ontario Teachers’ Pension Plan manages more than C$240 billion and has deployed over C$45 billion in private equity, including a growing emphasis on direct investments and venture capital (OTPP). These funds can absorb illiquidity risk and execute complex co-investment strategies that UK DC schemes—particularly smaller ones—currently cannot.

Another practical constraint is the paucity of investable opportunities in UK private markets. Pension capital can only flow domestically if there are companies and projects of sufficient scale and quality. Unfortunately, the UK’s venture ecosystem, though improving, still lags the U.S. in depth and maturity. The private equity market is intermediated and often reliant on non-UK general partners. Worse, the IPO market has been moribund. In 2023, UK IPO volumes fell by over 50% year-on-year, raising just £1.2 billion—the weakest performance since the global financial crisis (EY). High-profile firms such as ARM chose U.S. listings, reinforcing perceptions that London is no longer the primary destination for scale-ups.

Without a reliable IPO pipeline, private market investments become harder to exit. For pension schemes, this represents a material risk: how do you generate liquidity and manage drawdowns when public capital markets do not offer viable exit routes? The Mansion House Accord appears to assume that these capital market issues will solve themselves—or at least improve organically. That is unlikely without direct regulatory reform to make UK listings more attractive.

Compounding these structural weaknesses is the fragmented UK regulatory environment. No single entity is responsible for delivering the Accord’s objectives. The Financial Conduct Authority, The Pensions Regulator, HM Treasury, and the British Business Bank all operate in related but uncoordinated silos. Without a unified national strategy for domestic capital mobilisation, the Accord risks becoming an elegant but ineffectual gesture.

That said, pension providers themselves have largely welcomed the Accord, albeit with caveats. Aegon UK emphasised the need for a “pragmatic approach to implementation” and highlighted the importance of a steady supply of high-quality UK investment opportunities. It committed to cornerstone investment in the British Growth Partnership Fund I and highlighted its use of Long-Term Asset Funds (LTAFs) within default schemes.

Aviva called the Accord a “major opportunity” and pointed to recent fund launches aimed at providing access to early-stage UK companies. Nest already allocates 15% of its assets to private markets, with 60% of that in the UK, and aims to double the allocation over time. People’s Pension, Mercer, and Smart Pension all echoed similar themes: commitment to diversification, long-term value, and support for domestic growth. NatWest Cushon highlighted polling data suggesting younger savers want more of their pensions invested in UK assets. Meanwhile, M&G’s Andrea Rossi linked private markets with nation-building infrastructure and real-economy value creation.

However, the praise was tempered by realism. Several providers stressed the importance of government partnership, sufficient scale, and practical mechanisms to make private market exposure administratively viable. SEI noted that earlier scepticism had been allayed only after assurances about investable opportunity flow. Standard Life stressed the primacy of fiduciary independence, and TPT Retirement Solutions warned that provider pricing models often leave little room for high-fee private asset structures within capped fee regimes.

What emerges is cautious optimism—not a blank cheque. The Mansion House Accord has given political voice to a long-festering problem: British capital fails to fund British growth. But without enforcement, infrastructure, and reform, it will not deliver the systemic shift policymakers hope for.

To succeed, the Accord must evolve from rhetorical coordination to institutional execution. It must be matched by pension fund consolidation, fee reform, and revitalised capital markets. Only then will the ambitions of the Mansion House Accord materialise into the sort of durable economic impact its architects so fervently claim to seek. Until then, it remains, in the finest British tradition, a rather elegant fudge.