Major pension providers have announced that they will sign the Mansion House compact agreement following Chancellor Jeremy Hunt’s speech which outlined measures to boost investment into UK businesses.
Aegon, Mercer and Smart Pension are among those who have agreed to raise the percentage of pension funds they manage for clients by investing in unlisted shares in accordance with the goals of the Compact.
The compact is an industry-led voluntary initiative to increase investments in unlisted shares in order to improve the financial security of UK pension investors.
The objective of the agreement is to ensure that at least 5 per cent of defined contribution (DC) default funds are allocated to unlisted equities by 2030.
Aegon UK chief investment officer Tim Orton says: “Aegon UK is proud to be a founder signatory of the Mansion House Compact which will help deliver better long-term outcomes for our pension scheme customers.
“Trustees and managers of DC schemes are under a duty to act in the best interests of their scheme members. As part of this, they should consider a wide range of investments, including private equity, for the benefit of the members. This is particularly true of scheme default funds where most members remain invested, leaving investment decisions to the trustees or manager.
“We are committed to ensuring our customers can access and share in the growth and success of innovative companies we invest in as part of diversified portfolios. We will use our scale and expertise to develop investment solutions seeking to improve the retirement outcomes of the millions of members of the defined contribution pension schemes we support.
“The Compact will also create opportunities that help deliver £500 million assets under management target set for investments in climate solutions within its default funds by 2026 and as we progress towards net zero.”
Mercer UK investments and retirements leader Phil Parkinson: says: “Mercer supports proposals that lead to improved pension scheme member outcomes. As a global investment solutions provider, we see first-hand the value that illiquid asset allocations can bring to investors’ portfolios from a risk and a return perspective and are in favour of initiatives designed to unlock this asset class for DC members.”
Smart co-founders Will Wynne and Andrew Evans say: “Smart Pension helps more than a million people across the UK to save toward a better retirement through great tech and great customer experience. Over the last eight years we’ve been able to grow a fantastic, global fintech business from the heart of London by innovating to put UK employers and UK retirement savers first.
“It’s excellent to see initiatives like this, encouraging the market to create more innovative high-growth UK companies, and in doing so to provide a better retirement for the country’s savers. Naturally we are delighted to support this, and proud to be signatories, investing on behalf of our members to support the UK’s tech sector further, to help more home-grown startups and scaleups to flourish and to deliver for pension savers.”
Smart chair Ruston Smith says: “Smart Pension is committed to securing better outcomes for long-term savers. Giving UK savers access to higher net returns by investing in unlisted equities, including innovative high-growth UK companies, as part of a well-diversified portfolio, will deliver these outcomes over time.
“We are pleased to be a signatory of the Mansion House Compact and, as a successful British fintech, we are proud to be supporting the country’s technology sector, helping home-grown startups and scaleups to flourish and thrive.”
Smart Pension master trust trustee director and chair of the trustee investment sub-committee Nikesh Patel says: “The Trustees look to generate strong returns for members. Investing in certain unlisted equities, including innovative high-growth UK companies, creates potential for strong returns and should deliver better outcomes over the long term our members are saving for.
“The Smart Pension Master Trust is committed to ensuring that its members gain access to a range of appropriate and relevant asset classes. For example, we have had a private credit allocation in our default fund since April 2021, which has given rare access to this asset class in DC pension schemes.”
Smart sustainability director Rowena Humphreys says: “As a company deeply committed to sustainability, Smart is excited to extend its full support to the Mansion House Compact. These impactful measures, channelling substantial investments into fast-growing UK companies and green initiatives, resonate perfectly with our mission to transform retirement, savings and financial wellbeing, across all generations, around the world.
“Together, we can foster sustainable growth, amplify returns for pension scheme members, and make a meaningful impact on our planet.”
