Achieving better outcomes: Private Markets and the UK Retirement Challenge
It is challenging to define the future investment landscape by a single problem. However, in the UK, we face a significant pension savings gap, which is exacerbated by the increasingly sharp reality of an aging population.
According to the Department for Work & Pensions, four in 10 (43%) working-aged people (equivalent to 14.6 million) are not saving enough for retirement[1] Investment returns alone cannot close this gap entirely. Evidently, there is a significant need for greater education on understanding the importance of saving sufficiently for retirement, while maintaining higher contribution levels also remains essential. However, once invested, we see private markets as a way to help member assets achieve higher returns over the long term, leading to better retirement outcomes.
This transformation has been driven, in part, by the recent Mansion House Accord, a UK government initiative calling for UK DC master trusts to sign up to an ambition to have at least 10% of their default pension scheme assets allocated to private markets by 2030, with at least 5% invested in UK-based assets.[2]
Our belief is that private markets are appropriate longterm investments for DC members likely to improve risk adjusted returns and retirement outcomes, with The Accord providing an alignment of policy and investment philosophy that can accelerate industry adoption.
