Key facts
- UK pension funds have invested only 0.6% of assets in unlisted equities three years after signing the Mansion House Compact.
- The 2030 target requires signatories to invest 5% of assets, potentially unlocking £50bn.
- Client support for riskier unlisted equities has decreased, impacting willingness to deploy capital.
- Only two legally binding commitments to venture capital funds have been made by signatories.
- Industry leaders are urging for greater urgency and policy changes to meet the compact's goals.
Three years after its inception, the Mansion House Compact, a UK initiative aimed at encouraging pension funds to invest in unlisted companies, is facing significant challenges in meeting its ambitious targets. The deal, signed in July 2023 by 11 of the UK's largest pension providers, sought to unlock up to £50 billion in investment by 2030 by having the defined contribution market allocate five percent of its assets to unlisted equities.
However, progress has been slow. As of October 2025, only 0.6 percent of total assets, amounting to £1.6 billion, has been invested by the signatories. This figure represents a modest year-on-year increase of 0.24 percentage points, falling far short of the agreed-upon five percent target with only four years remaining.
Industry stakeholders are expressing growing concern over the pace of investment. Michael Moore, CEO of UK Private Capital, emphasized the need for significantly increased urgency to ensure pension savers benefit from diversified portfolios and potentially stronger returns from unlisted assets. This call for acceleration comes as client sentiment towards riskier unlisted equities appears to be souring. Figures from the Association of British Insurers (ABI) indicate that while seven out of eleven firms reported client support for such investments in 2024, this number dropped to just four the following year. The ABI attributes this shift to a focus on minimizing costs, as unlisted equities typically involve higher fees and greater risk.
Furthermore, venture capital funds are struggling to secure concrete commitments from signatories. UK Private Capital data reveals only two legally binding commitments to VC funds aligned with the compact. This lack of engagement has led nearly 50 percent of venture capital and growth equity firms to believe the agreement will not achieve its investment goals.
Tim Levene, CEO of Augmentum Fintech, pointed to a cultural lag among investors who are slow to recognize the long-term value of allocating capital to startups. He noted that backing early-stage businesses requires time for capital to become productive. Levene also addressed concerns about risk, arguing that the UK has experienced managers with proven track records, suggesting the shortage lies in pension funds' willingness to back them rather than a lack of capable managers.
Despite these challenges, some firms have made strides. Smart Pension invested £330 million in Octopus Energy Generation, and Nest allocated £200 million to venture capital. Standard Life has a joint venture with Schroders Future Growth Capital, and Mercer partnered with Schroders for a private markets vehicle, committing £350 million in its first year. The ABI acknowledged that the compact is a journey requiring market, policy, regulatory, and operational development, and that signatories have taken important steps.
However, signatories are calling for further policy and regulatory intervention. Lorna Blyth, managing director of investment proposition at Aegon, highlighted that key regulatory building blocks, such as alignment on performance fees and clarity on Conditional Permitted Links, are still missing. These are considered crucial enablers for broader private market investment. Several signatories urged the government to continue developing investment opportunities in the UK and called for alignment between the Financial Conduct Authority (FCA) and the pensions regulator on performance fee treatment. The Pension Schemes Act and the upcoming Value for Money framework, set to be implemented from 2028, are seen as potential regulatory levers to address the cost-first mindset that is hindering progress.