Over the past few years, pension schemes have faced increased pressure to allocate more to UK-based investments. The Mansion House Accord – signed by 17 major pension providers in May 2025 – showed the level of willingness to put more money to work domestically.
However, just a few weeks later, the Pension Schemes Bill was laid in parliament, including a controversial “backstop” clause that threatens to mandate allocations if the government is not satisfied with progress.
There was significant tension throughout the year on this point, with trade bodies including Pensions UK, the Society of Pension Professionals and the Pensions Management Institute all voicing strong opposition to the measure. Despite this, pensions minister Torsten Bell and chancellor Rachel Reeves have held firm and the clause remains as the bill makes its way through the House of Lords.
Against this background, Pensions Expert asked investment experts for their views on domestic investment challenges and opportunities as we enter 2026.
Click on the question to jump to the responses.
What can the government do to support UK investment further?
Dan Mikulskis, chief investment officer at People’s Partnership, provider of the People’s Pension: “For the Mansion House Accord to work, the government needs to help facilitate a pipeline of UK-based projects that schemes can invest in – for example, through improvements to the planning and grid connection processes.”
Jayesh Patel, head of UK DC distribution at Legal & General: “An expansion of auto-enrolment will not only tackle the UK’s pension adequacy challenge but also increase the flow of pension capital into the UK economy. Current contribution levels will fail to deliver the retirement most people expect. By lowering age thresholds and increasing contribution levels over a phased period, the government can ensure broader participation, while unlocking a significant source of investment into productive assets.”
Simon Cunnington, UK Opportunities portfolio manager at Border to Coast Pensions Partnership: “Policy certainty is crucial to give investors the confidence to commit to the UK. To date, the government has taken steps to offer that much-needed clarity on key sectors through the likes of its Industrial Strategy, and we need to see this commitment to long-term stability continue. Our report ‘Unlocking UK Growth’ found infrastructure managers want the government to be clear on what policies will be pursued to increase the ease of investment, de-risk projects, and co-invest along with the private sector where appropriate.”
Ronan O’Riordan, head of UK and Ireland business development at Schroders: “The UK is an international outlier in terms of the low levels of investment into domestic equities from our own pensions system. This is why we welcomed New Financial’s research published earlier this year, which showed that requiring all DC default funds to adopt a ‘UK weighted’ asset allocation could make a meaningful difference to domestic investment. Importantly, no one would be forced to have a domestic bias. Engaged savers who have a view would still be able to self-select their options as they do now.
“This matters because if we don’t have a thriving UK-listed market that supports the growth of our public companies or attracts those that want to list, we will continue to encourage the best firms to either list overseas or opt to remain private, to the detriment of savers and the UK economy.”
What progress will we see towards the Mansion House Accord goals in 2026?
Andrew Doyle, lead investment adviser at LifeSight: “We expect schemes of all sizes to make some progress, though private markets allocations are likely to build up over a period of years… Smaller schemes are more likely to invest in ‘off the shelf’ funds, which may be relatively quick to introduce (to the extent they can find off-the-shelf opportunities they rate positively).
“Bigger schemes are more likely to do something more bespoke, though likely have large teams to help make progress promptly despite the additional work associated with bespoke approaches. We believe this ability to create bespoke solutions is one of the key benefits of scale.”
“Allocations are unlikely to be the main focus in 2026 while schemes put capabilities in place… We expect to see allocation activities ramp up as we approach the end of the decade.”
Dan Mikulskis, People’s Partnership
Dan Mikulskis (People’s Partnership): “Progress in 2026 is likely to focus on schemes putting in place some of the key capabilities and partnerships – for example, the asset managers and operational structures to deliver their target operating model in private markets. A range of operating models are being contemplated across the industry, from commingled-only investment to direct ownership and co-investments.
“Allocations are unlikely to be the main focus in 2026, while schemes put the capabilities in place to deliver their investment strategies. However, we expect to see allocation activities ramp up as we approach the end of the decade.”
Jayesh Patel (Legal & General): “The Mansion House Accord is a vital initiative for channelling capital into the UK and helping the government deliver on its growth mission. In 2026, we expect continued progress in DC allocations into private markets. These initiatives mark a crucial step towards mobilising UK pension capital to drive economic growth while improving long-term retirement outcomes.”
What is the biggest challenge for schemes trying to allocate domestically?
Dan Mikulskis (People’s Partnership): “One of the biggest challenges facing schemes trying to allocate domestically is the lack of a pipeline of suitable projects that schemes can invest in… Without this, funds may not be able to fulfil their Mansion House Accord commitments. Historically, the development of new assets has been held back by grid connection and planning delays. This is changing, but slowly.
“There is a lack of dedicated UK infrastructure funds – most investment is done globally or pan-Europe. There are very few scaled-up pools of dedicated UK infrastructure capital. This makes it hard to find the right vehicles – but, more fundamentally, it means the sector lacks reliable anchor investors.”
“With the drive for all pension pots to invest more on home soil, we need to see policy support and frameworks put in place to support a continued pipeline of high-quality investment opportunities.”
Simon Cunnington, Border to Coast
Simon Cunnington (Border to Coast): “Pooling in the Local Government Pension Scheme has helped solve one issue – having the scale and expertise to pursue quality investment opportunities cost-effectively. However, with the drive for all pension pots to invest more on home soil, we need to see policy support and frameworks put in place to support a continued pipeline of high-quality investment opportunities. Ensuring access to opportunities offering strong, long-term risk-adjusted returns will be key for pension funds looking to deliver for members over the coming years and decades.”
Jayesh Patel (Legal & General): “Pensions play a significant role in boosting long-term investment in the UK, yet some schemes still face challenges in making the most of domestic allocations. Smaller schemes, lacking in scale, often struggle to reap the rewards of the UK market, where higher volumes may be needed to effectively assess and access the full range of solutions on offer.
“Measures proposed under the government’s Value for Money framework to encourage transparency and consolidation will help address these challenges. The UK market must also increase the supply of quality investment opportunities needed to meet the ambitions of Mansion House.”
A spokesperson for the Pension Protection Fund (PPF) said: “The PPF plays a significant role in supporting the UK economy through its investment strategy. Combined, our investments support £38.8bn in economic activity – or around 2% of the UK economy.
“However, DB schemes in general have been moving away from investing in UK equities for the past two decades. We can see a case for applying the same principles that underpin reforms in DC and the Local Government Pension Scheme to the DB market. Consolidation can create the scale necessary to allow consolidated DB liabilities to be run off in a way which would facilitate investment of the assets backing those liabilities in gilts, UK equities, and infrastructure.”
What is the biggest opportunity in domestic investment?
Dan Mikulskis (People’s Partnership): “UK real assets in general present a host of great opportunities due to favourable pricing and having been out of favour for a few years. Even relatively solid core assets are showing attractive returns of 7% a year or more. [In] target development and value-add opportunities, such as investing in new infrastructure before it has been built, the return picture looks even better.
“This can either mean acquiring projects at an earlier stage of development or acquiring operational projects or platforms where there is scope to add additional capital expenditure to generate returns. This is a key element to generating the higher returns that we want, but also a key pathway to generating positive economic impact, which is not achieved through simply acquiring operational assets.”
A spokesperson for the Pension Protection Fund said: “We welcome the government, regulators, and industry efforts in reforming wholesale markets and pensions to support growth and investment. The formation of the Sterling 20 is a key step forward. The Sterling 20 provides an important platform for collaboration. By engaging early with government and industry partners, we can help ensure investment projects are designed and structured for success.”
Simon Cunnington (Border to Coast): “The Industrial Strategy and initiatives like the Clean Power 2030 Action Plan give much-needed clarity on government priorities, allowing investors to make meaningful allocations to domestic investment. The utilisation of public finance institutions such as the National Wealth Fund and British Business Bank further demonstrates the government’s commitment to long-term certainty.
“While the way these [institutions] will interact with investors, and each other, is still to be finalised, at least the direction of travel is clear. Against this backdrop, our team has identified several thematic opportunities in the UK that stand out, such as our burgeoning life sciences sector, growing demand for housing and commercial logistics, and energy infrastructure.”
“We see a huge opportunity in UK productive finance assets that can deliver attractive returns for investors alongside meaningful contributions to growth in the real economy.”
Jayesh Patel, Legal & General
Ronan O’Riordan (Schroders): “Crucially, it is about ensuring schemes choose the right investors with the relevant expertise and resources to partner with. Schemes and asset managers need to be aligned in terms of delivering relevant and comprehensive investment solutions which meet increasingly complex investment needs, both from a philosophical investment perspective and, crucially, in terms of financial returns and impact targets.”
Jayesh Patel (Legal & General): “We see a huge opportunity in UK productive finance assets that can deliver attractive returns for investors alongside meaningful contributions to growth in the real economy. There is strong demand from both DC and DB schemes to allocate to investments that secure their member’s futures through steady cashflows, as well as delivering social impact in the communities in which they live and work, with affordable housing and infrastructure being prime examples. Such assets also enjoy public policy tailwinds, as the government’s productive finance agenda seeks to make investment more attractive.”