The Compact, launched in 2023, is a voluntary, industry-led initiative supported by 11 major pension providers and the City of London Corporation.2
The latest update from the ABI – whose role it is to track signatories' progress – shows investment in unlisted equities held through Defined Contribution (DC) default funds has doubled since last year, growing from £0.8 billion to £1.6 billion.3
This increase reveals a growth in funds’ exposure to unlisted equities from 0.36% to 0.6%, marking further progress towards the Compact’s ambition to allocate at least 5% by 2030.
Firms have taken several additional steps which help them progress towards the initiative’s goals. In the last year, the majority (eight) of signatories have established new partnerships with asset managers with a view to invest in private markets. Just under half (five) of the signatories launched a new Long-Term Asset Fund (LTAF) or a similar vehicle with exposure to unlisted equities or signed up to partnerships to offer one.
Yvonne Braun, Director of Long-Term Savings Policy at the ABI commented: “This year’s progress is testament to the continued efforts of the Mansion House Compact signatories to deliver better results for savers by investing in unlisted equities.
“Signatories have taken important additional steps, including making necessary changes behind the scenes, to reach the Compact’s goals. Changes to asset allocations take time, with many steps and approvals before capital can be deployed. Having made progress on the early stages in the first year of the Compact, we’re seeing this gain momentum in the second year.”
To enable signatories to deliver the Compact, the entire decision-making chain, from trustees to employers and advisers, needs to transition from a cost-focused to a value-focused approach. The results show that support for increasing investment in unlisted equities from clients has decreased year on year. Just four signatories reported positive client sentiment, down from seven last year, due to a focus on minimising costs instead of maximising long-term value.4 Without this backing, the proportion of capital that can be allocated towards unlisted equities will be limited.
Providers are intensifying efforts to make the case for private market investment with clients, through educational initiatives and public engagement. The Value for Money framework, set to come into force in 2028, is also expected to play a pivotal role in enabling this shift.
“While firms are doing what they can to educate and inform clients about the long-term benefits of such adjustment, we need continued policy support and a cultural shift across the entire value chain to value over cost alone. We’re working closely with the government and regulators to ensure the Value for Money framework is designed and implemented successfully, and look forward to seeing further progress on this.”
Mansion House Accord
This update only covers the progress made towards the Mansion House Compact, not the Mansion House Accord. The Mansion House Accord is a separate voluntary pledge by seventeen of the largest workplace pension providers in the UK in May this year. Jointly led by the ABI, Pensions UK and the City of London Corporation with the support of the Chancellor, Rachel Reeves, it includes a broader set of asset classes and contains a UK specific ambition. Signatories to the Mansion House Accord have agreed that the ABI and Pensions UK will work together to track progress of the Accord, based on the asset allocation data to be collected by the regulators. The City of London Corporation will be a key contributor to discussions.
1.The 11 Compact signatories are: Aegon, Aon, Aviva, L&G, M&G, Mercer, NatWest Cushon, NEST, Phoenix, Scottish Widows and Smart Pension.
2.The Mansion House Compact was announced by the then City of London Lord Mayor, Sir Nicholas Lyons, in July 2023.
3.These figures are based on data as of February 2025. The full report, produced in partnership with the City of London Corporation is available here. It also gives greater detail on actions taken and barriers identified/navigated by signatories and their individual suggestions for possible policy interventions to improve the system.
4.The remainder of signatories in year one and two of the Mansion House Compact qualitative survey responded to this question stating they “neither agree nor disagree” or “prefer not say”.
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