How important is scale when it comes to DC investment into private markets?
Scale is critical to enable better outcomes. At smaller sizes, private markets exposure is often constrained to pooled or simplified structures, with limited ability to diversify across sectors or geographies. With scale, schemes can access broader opportunities including co-investments, sector‑specific strategies and direct investment. Scale also helps smooth one of the defining features of private markets: the J‑curve. Larger programmes can maintain a pipeline of commitments across the investment lifecycle, giving exposure to mature, income‑generating assets and newer growth investments. Scale can also bring stronger governance frameworks and more efficient cost management.
How are schemes adapting private market investment strategies?
Schemes are starting to think about private assets across the full member journey. Today, post‑retirement strategies reflect current member behaviour, with many individuals drawing down or cashing out relatively early. As a result, the focus has to be on assets that provide liquidity, capital preservation and some degree of inflation sensitivity. But with more members relying on DC for long‑term retirement income, schemes are exploring how private assets – particularly infrastructure and real estate – can support sustained, inflation‑aware income streams over time. This means more diversified income sources with flexible retirement frameworks, balancing liquidity with long-term income needs.
What is under the bonnet of the L&G Private Markets Access Fund?
Already at scale, the strategy is a globally diversified, multi‑asset portfolio. Also part of our Lifetime Advantage default range, it combines exposure to things like private equity, private credit, infrastructure, renewables, real estate and other real assets. It spans 13 sectors, 14 countries (including the UK) and 15 asset classes. Importantly, it blends assets at different stages of maturity to deliver balanced exposure from day one.
What are the risks of focusing solely on target allocations?
Private markets allocations in isolation say little about member outcomes. Poorly implemented exposure can introduce issues around liquidity, pricing, fairness between member cohorts and unnecessary cost or complexity. Trustees and schemes are increasingly focused on how investments are implemented, rather than how much is invested. Taking full advantage of the specific opportunity in private markets requires an integrated portfolio management approach.
What innovations are on the horizon?
The next phase is likely to centre on depth, usability and outcomes. There will be continued evolution in fund design – including more sophisticated blending of evergreen and closed‑ended structures, improved liquidity management and better pricing mechanisms tailored to DC realities. Strategies will expand into a wider opportunity set, including more direct investments, co‑investments, private equity and emerging areas such as digital infrastructure. The role of private assets in retirement is also likely to become a major focus, particularly in delivering diversified, inflation‑aware income streams that complement traditional solutions. Future success will not be defined by allocation size, but whether private markets deliver better, fairer outcomes for members.