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Public markets are the backbone of DC investing. Even so, recent market swings have prompted employers and advisers to look for diversification that can better support members’ long-term returns.
Why private markets for workplace pension schemes, and why now
Volatility is now a regular feature of markets, and we’ve seen periods when traditional diversifiers move together. By widening the investable universe beyond what’s listed, private markets open the door to parts of the economy that DC schemes haven’t traditionally reached – from private companies and loans to real assets like infrastructure projects.
For context, UK datasets show around 38,400 private mid-sized companies versus roughly 1,550 public listings, so public markets capture only a slice of the economy. That matters because many savers aren’t on track for retirement.
According to a 2025 UK government report, more than four-in-ten people are undersaving. DC pension schemes have long been shaped by tight cost constraints, but the direction of travel is towards value and net member outcomes – especially as schemes look for investments that can work harder over the long term.
Balancing opportunities and challenges
Private assets offer opportunities, but they also bring risks and challenges. They’re less liquid, valued less often and need specialist expertise and strong governance to help maximise potential returns. Access alone isn’t enough – performance varies widely between managers, so discipline and manager quality are essential.
To support responsible access, the industry has introduced long-term asset funds (LTAFs) – FCA-regulated pooled routes into private assets with dealing and oversight for long-term investing. They address barriers like scale, administration and liquidity.
How Standard Life is opening up private markets responsibly
Our focus is simple: we aim to design, develop and deliver private markets access to support better long-term outcomes for members. This means thinking long term, diversifying widely, embedding robust governance and keeping investment independence so we can select the right managers for each opportunity.
We launched Future Growth Capital (FGC) – our joint venture with Schroders – in 2024. FGC provides specialist routes for workplace pension schemes into private assets, via FCA-regulated LTAFs. These build diversified exposure across private equity and venture capital, private debt, and real assets like infrastructure. FGC’s dedicated team focuses solely on identifying and investing in high-quality private market opportunities.
How we ensure quality and consistency
Quality sits at the centre of our approach. The private market landscape is complex, so manager selection matters. Accessing quality opportunities is closely linked to manager skill and access, and that can come with a higher cost profile, which is why schemes need to focus on value for money and net outcomes after fees.
FGC is key to this, for us – they source and underwrite opportunities, select established managers and build portfolios that balance growth, cash-flow characteristics and risk. FGC’s reputation and credibility allow access to a wider pool of managers, helping us target the right expertise.
We know that some investments can feel abstract to members. Private assets can be easier to picture – for example, financing affordable housing. This helps members connect with their pension investments and the economy around them.
Taking a measured, long-term approach
Introducing private assets into workplace pension schemes is a carefully managed process. It means building exposure steadily to support diversification across different funding cycles while managing liquidity. It requires ongoing governance: monitoring managers, reviewing allocations as conditions change and keeping everything aligned with our investment beliefs. That’s also why schemes weigh cost constraints against the potential to improve net member outcomes over the long term. We also need to keep members’ interests at the forefront of our minds and explain valuations and risks.
Preparing for the next chapter
Private assets complement public ones – they don’t replace them. Global equities, bonds and property will continue to play central roles in pensions investing. What private markets do is broaden the toolkit, offering more ways to balance risk over time and helping to smooth different market conditions.
For employers, advisers and trustees, this means the opportunity to put more of the real economy in members’ reach is here – as long as they take it with care, clarity and conviction.
The value of investments can go down as well as up and could be worth less than what was paid in. Past performance isn’t a guarantee of future performance.
To read more articles from Standard Life visit the content hub on Corporate Adviser – here.
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1 Analysis of Future Pension Incomes 2025 – measured by their target replacement rate, or the percentage of pre-retirement earnings they would need to replace to have an adequate income in retirement, before housing costs. This is calculated assuming individuals convert the full value of their DC pension pot into an annuity.
Phoenix Life Limited, trading as Standard Life, is registered in England and Wales (1016269) at 10 Brindleyplace, Birmingham, B1 2JB.
Phoenix Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.