The £50bn private investment drive by UK pension funds has hit a snag just three years into its inception, sparking concerns over the initiative's future prospects. In July 2023, eleven prominent UK pension providers signed the 'Mansion House Compact', aiming to boost high-growth businesses by increasing allocations to unlisted equities. The then-Chancellor, Jeremy Hunt, forecast that this could unlock up to £50bn of investment by 2030 if the broader defined contribution (DC) market followed suit and invested five per cent of their assets in unlisted equities.
According to a recent update from the Association of British Insurers (ABI), signatories have committed just 0.6 per cent of their total DC assets to unlisted equities, amounting to £1.6bn as of October 2025. This represents a modest year-on-year increase of 0.24 percentage points and falls short of the desired pace to meet the 2030 deadline.
One key factor contributing to this slowdown is a decline in client support for investing in unlisted equities. In 2024, seven out of eleven firms reported their clients were supportive of increased investment in unlisted equities; by 2025, this had dwindled to just four. The ABI attributes this shift to clients' desire to minimise costs, as unlisted equities are typically associated with higher fees and perceived risks.
Additionally, venture capital (VC) funds are struggling to secure firm commitments from pension fund signatories. UK Private Capital identified only two legally binding commitments to VC funds from default funds aligned with the compact.
Industry leaders are urging a fundamental shift in approach to meet their commitments. Michael Moore, chief executive of UK Private Capital, stressed that investment must increase significantly for signatories to meet their targets. Tim Levene, chief executive of Augmentum Fintech, highlighted the 'lag' between investors and experienced managers with proven track records in VC investing. He argued that despite perceived risks and fees, a shortage of pension funds willing to back them threatens to hinder innovation.
The consequences of this slow progress are substantial for the UK economy. Failure to meet the £50bn target could deprive innovative British companies of crucial growth capital, potentially hindering job creation and economic expansion. For pension savers, the intended benefit was a more diversified portfolio with stronger returns from high-growth sectors. While some firms have made individual significant investments in private capital – such as Smart Pension and Nest – the overall collective effort remains behind schedule.