Scottish Widows, Fidelity and Hargreaves Lansdown have not joined 17 other major providers in signing up to the Mansion House Accord today.
The Mansion House Accord sees major providers and schemes express their intent to invest at least 10 per cent of their DC default funds in private markets by 2030, with half of that allocated to the UK.
All three providers are absent from the list of provider signatories published in the joint statement from the government, ABI and PLSA.
Scottish Widows is the second-biggest provider in terms of bundled DC assets, at £97.7bn, according to the Corporate Adviser Master Trust & GPP Defaults report, published yesterday. It was a signatory to Jeremy Hunt’s Mansion House Compact in 2023. Royal London was not a signatory to the Mansion House Compact, but has signed the Mansion House Accord.
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Scottish Widows says its investments are already geared towards the UK, with 21.5 per cent of the £165bn of total assets it has investment influence over already allocated to the UK. It has total assets under administration of £230bn.
£11.6bn of its £17.6bn shareholder assets, investments which back its annuity and retirement portfolio, are invested in the UK. This includes a £5.6bn UK loan portfolio, funding social housing, infrastructure and higher education, the provider says.
It says £5.5bn of its c.£72bn (7.6%) default pension investments – which it describes as the largest and longest running in the market – is invested in UK equities.
A Scottish Widows spokesperson said: “It is great to see the Government and industry focusing on further private investment into the UK. We’ve announced plans to launch a Long Term Asset Fund, as part of our ongoing commitment to providing innovative investment solutions for customers. We hope to be able to have this live by the end of the year so that our customers have the option to invest further in private markets. We remain committed to the original Mansion House Compact target of investing 5% of our default funds in unlisted equities by 2030. Later this year we’ll share details on further investment into innovative UK business.”
A spokesperson for Fidelity said: “Fidelity International has a strong conviction in the merits of investing in private markets to support better outcomes for pension scheme members. For our defined contribution clients and members, whose investment horizon is measured in decades not years, we believe there is strong alignment in objectives of private market assets and member objectives.
“FutureWise, Fidelity International’s £17.9bn default investment strategy, has already integrated private assets via 15 per cent allocation to a Long-Term Asset Fund (LTAF), offering globally diversified exposure across private equity, private credit, infrastructure, real estate and natural resources. Over the next three years we plan to gradually increase private market investments until reaching a target allocation of 10% invested in the growth phase of FutureWise.
“Whilst we welcome the Government’s focus on private market allocations in defined contribution schemes, we are unable to sign this Mansion House Accord at this stage. We are committed to offering pension scheme members the best possible outcomes, selecting the very best investments regardless of where they located globally.
“We are pleased to see the Government’s commitment facilitate a pipeline of UK investment opportunities. We also look forward to continuing to work with the Government and the industry to support the implementation the wider policies that are critical to the success of these measures.”
Meanwhile Fidelity’s investment director James Monk says explained further why Fidelity has decided not to be a signatory at present. He said while Fidelity International would continue to invest in both private markets and UK assets “our research would say that the UK represents 15 per cent of the global private asset pool, rather than 50 per cent, so this does create some structural bias that will need to be governed”.
He adds: “Most portfolio managers would tell you that the less constraints they have, the more freedom they have to deliver a better member outcome.”
Monk says: “Frustratingly, I think this Mansion House Compact push was borne out of UK underperformance of US in public markets, but this initiative does nothing to address headquartering and listing of UK private companies, nor increasing the supply of quality opportunities.”
Monk reiterated concerns that a sudden rush to invest in UK private assets could skew pricing in this market. He adds: “Let the bun-fight for UK assets commence! I hope the prices on UK opportunities don’t get over-inflated, making it more attractive for international investors to get out.”
