[SPONSORED ARTICLE]
According to the Department for Work and Pensions (DWP), around 12.5 million UK adults (March 2023) – 38% of the working-age population – are currently under saving for retirement.
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While a growing segment of the UK workforce, ethnic minorities face a significant pensions savings gap – under saving by as much as 54% compared to white British DC savers*. In 2024, we launched a Shariah-compliant Islamic Investment proposition to better serve Muslim DC members.
Given mounting pressures on government finances and the wind down of Defined Benefit (DB) pensions, Defined Contribution (DC) pension schemes must evolve to address pension adequacy.
The need for smarter investment strategies
To improve retirement outcomes, smarter investment strategies are essential. DC schemes are increasingly diversifying beyond traditional asset classes to unlock growth.
Approximately 90% of UK DC pension savers currently remain in default investment funds (Source: DWP as at November 2024), driving renewed attention to enhancing these offerings – a trend set to continue in 2026.
Delivering more income opportunities in the growth stages while balancing flexibility in the decumulation stage is key for modern-day defaults.
Approaching the decumulation phase, our default Lifetime Advantage Funds and Target Date Funds place greater weight on risk management by lowering the equity and increasing the dynamic asset allocation. Decumulation is likely to lead further innovation in 2026.
How private markets play a part
Private markets will continue to gain traction through innovative pooled vehicles that solve the daily pricing and liquidity challenges. These markets offer diversification and access to illiquidity premiums, aiming to boost long-term returns.
L&G was one of the first asset managers to launch a diversified private markets strategy range designed for DC savers. While the primary goal is to improve member outcomes, this approach also channels pension capital into investments that support economic growth, infrastructure, and social progress.
Our Lifetime Advantage Funds (launched in 2024), feature 15% exposure to our Private Markets Access Fund, with the remainder in ESG and factor-based strategies.
We’ve also enhanced our Target Date Funds including a small exposure to private markets, increasing total equities and focus on sustainability, US tech and AI.
More sustainable solutions
More broadly, global ESG integration and climate-aware investing has extended to encompass nature and social impact. In March 2025, we introduced the Nature and Social Outcomes strategy into our default funds. It aims for attractive risk-adjusted returns while delivering measurable outcomes in emerging markets. We’ve also allocated to thematic equities focused in areas of sustainability.
Looking ahead
By using every lever at their disposal, seeking dynamic asset allocation and advanced risk management solutions, the pension industry can help support changing member and societal needs.
While investment innovation is vital, it alone won’t solve pension adequacy. Member support; financial education; personalised, tech-driven tools and nudges toward higher contributions are just as essential.
To learn more visit am.landg.com/dcprivatemarkets