Workplace pensions hold around £2 trillion of assets and are systemically important to the UK economy. TPR's research highlights the practical challenges preventing schemes from investing capital at the pace and scale they could while continuing to deliver good outcomes for members.
Drawing on engagement with more than 40 stakeholders from across the pensions and investment industry, the research found schemes are interested in private market investments, including UK infrastructure, where they align with their investment objectives and fiduciary duties.
The report encourages trustees to work with advisers and assess whether they have the scale, expertise and governance capabilities needed to invest, starting with member outcomes, scheme strategy and risk profile, and to plan ahead for how their scheme may change over the next five to ten years.
To ensure growth remains a priority for schemes, TPR will use its regulatory approach to challenge trustees on their investment strategy and governance capabilities, through supervisory engagement, while also supporting industry initiatives that help remove barriers and improve access to suitable investment opportunities.
TPR Executive Director of Market Oversight, Ben Gunnee, said: "Pension schemes want to invest in private markets, but many schemes are currently experiencing practical barriers that limit their opportunity for investment.
"Our research can help government and industry understand what's getting in the way and where action could unlock investment that benefits members and the wider economy."
Minister for Pensions, Torsten Bell, said: "Pensions are a huge source of potential investment in this country, and we want schemes to be able to back UK growth as well as deliver good outcomes for their members.
"This research moves us closer to understanding the barriers holding schemes back, helping us work with industry to unlock investment that supports a stronger economy and better retirements for savers."
The report's key findings include:
Pension schemes are interested in investing in private market assets where it is in their members' interests.
Larger schemes with greater scale, governance capability and better access to specialist investment expertise are generally better placed to invest in private markets.
Most large DC schemes and DC master trusts have already invested or are intending to invest.
New investment vehicles, including Long-Term Asset Funds (LTAFs), are creating practical routes into private market investment for some schemes.
Barriers include policy and regulatory uncertainty, capability and knowledge gaps, opaque fee structures, limited transparency, restrictive market structures and limited availability of suitable investable opportunities.
As schemes gain greater scale and capability, they are likely to be better placed to access a wider range of private market investment opportunities.
The report highlights the role government, regulators and industry can play in improving the conditions for schemes to consider a broader range of investment opportunities where these are in members' interests, from shaping supportive policy to strengthening capability and governance across the sector.
TPR is continuing to work with these partners to address the barriers identified, reflecting the progress it is making against its commitments of supporting growth through pensions reform and long-term investment.
TPR Market oversight: UK pension funds - private market investment
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