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 long-term 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.
