More than half the UK’s largest DC default funds now have allocations to private markets, but average allocations are still below 5 per cent.
CLICK HERE TO DOWNLOAD A COPY OF THE PRIVATE MARKETS IN DC PENSIONS REPORT
These figures, contained in Corporate Adviser’s latest Private Markets in DC Pensions Report, show private market allocations are up year on year and gathering pace on the back of Mansion House reforms.
However this report shows that eight major providers still have no private market allocation in their largest default fund, underlining the gap between the government’s ambitions and implementation across the market.
The research shows progress is being made with 12 of the UK’s 20 largest multi-employer DC defaults allocating to private markets, up from just eight a year earlier. Over this period the average allocation has increased from 3.24 per cent to 4.75 per cent.
Nest remains the most advanced adopter, according to the report, with more than 20 per cent of its default growth portfolio allocated to private markets.
The findings come at a pivotal moment for the sector following the Pension Schemes Act 2026, which places greater emphasis on scheme consolidation, scale and investment into productive finance. It also introduces controversial mandation measures, which could see the government https://corporate-adviser.com/compelling schemes to invest in these assets if adoption lags commitments to invest 10 per cent of defaults in private assets by 2030, and half of this in UK-based investments.
This report gives granular detail on allocations to nine different private market asset classes in workplace defaults. These are shown for growth phase and both pre- and post-retirement strategies and detail UK-specific investments. The report also gives information on the size of providers’ mainscale defaults, a key aspect when it comes to accessing private market investments.
This market data is combined with adviser insight and research on what has become one of the main investment themes across the DC market. This shows continued opposition to government mandation, with more than seven in 10 advisers (71 per cent) stating they were fairly or very negative about compulsory investment into UK private assets.
However, advisers appear increasingly supportive of private market investing, despite the increased costs involved. More than four in 10 (41 per cent) now describe allocations to illiquid assets as essential, up from 27 per cent a year earlier, while 78 per cent say they are fairly or very comfortable with the higher charges associated with private market investments where these are expected to improve long-term outcomes.
The report shows that while the market remains in a build-out phase, significant progress is being made with providers expanding their use of LTAFs to access asset classes, alongside direct investments.
