Key facts
- UK pension funds have committed only 0.6% of assets to unlisted equities, far below the 5% target for 2030.
- Aegon has raised concerns that regulatory barriers are preventing pension funds from meeting the Mansion House Compact goals.
- Issues include performance fee structures and compliance with Financial Conduct Authority rules on fund vehicles.
- The current 0.75% annual fee cap on default funds is a significant obstacle for private market investments.
- Despite challenges, some progress has been made, with total committed capital reaching £1.6bn.
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
Aegon has warned that regulation is holding back some of Britain’s top pension fund managers from pumping cash into the country’s start-ups and unlisted companies. Aegon, which manages £160bn of assets in the UK, is one of the 11 companies that committed to investing five per cent of their assets in unlisted equities by 2030. However, Aegon has warned that regulatory hurdles could throw timelines into doubt. Lorna Blyth, managing director, investment proposition at Aegon, stated that key regulatory building blocks are still not fully in place, including alignment on performance fees and greater clarity on conditional permitted links. These measures are considered important enablers for broader investment in private markets, and providing certainty in these areas will be critical if the industry is to deliver on the compact’s ambitions.
Other signatories have also expressed concerns over performance fees, branding them a “challenge.” Providers said managing appropriate fee structures remains problematic, as certain models used in private capital markets are financially unfeasible. To protect savers from having their pension pot eroded by high fees, the government introduced a law in 2015 preventing the total annual fee on default funds from exceeding 0.75 percent of a pot’s total value. While the cap has kept costs low for savers, it has created a barrier for signatories looking to invest in high-growth assets, such as venture capital, which typically charge performance-based fees. Trustees are turned off from investing in private markets over fears fees could surpass the limit.
Permitted links have also been deemed a “barrier to investment,” with the majority of fund structures suitable for private assets failing to comply with the rules. The regulatory rules from the Financial Conduct Authority (FCA) determine what assets funds can hold in a bid to protect savers from overly risky or unsuitable investments, restricting DC pension schemes from investing in certain vehicles. Typically, venture capital and private equity funds are structured as close-ended vehicles which have a fixed pool of capital and a set lifespan, and do not comply with the FCA’s rules. While the FCA created long term asset funds (LTAFs) to address the problem, providers have complained the wrapper is expensive to set up and has a lengthy regulatory approval process.
Despite the regulatory barriers voiced by Aegon, the firm has private equity exposure through two strategies, Life Path and Universal Balanced Collection. Other providers have also taken steps towards meeting the goal, such as Standard Life via a joint venture with Schroders Future Growth Capital. But the October 2025 update from the ABI detailed a year on year 0.24 percentage point increase in the exposure committed to unlisted equities. This took total exposure to 0.6 per cent with £1.6bn committed, a considerable distance from the five per cent promised in the next four years.