Some of the UK’s largest defined contribution pension schemes have agreed to commit 5 per cent of their default funds to unlisted equities by 2030.

Aviva, Scottish Widows, L&G, Aegon, Phoenix, Nest, Smart Pension, M&G and Mercer have all signed the ‘Mansion House Compact’, which was announced by the chancellor in his Mansion House speech last night (July 10).

The signatories represent two-third of the UK’s DC pensions market, and the agreement could represent up to £50bn in investment into high growth companies, if the rest of the market follows.

DC pension schemes in the UK currently invest under 1 per cent in unlisted companies.

In his speech, chancellor Jeremy Hunt said his aim is to enable the UK’s financial services sector to increase returns for pensioners, improve outcomes for investors and unlock capital for UK growth businesses.

He said the £2.5tn pensions market in the UK has been strengthened by policies such as auto-enrolment, but there is currently a “perverse situation” in which UK institutional investors are not investing as much in UK high-growth companies as their international counterparts.

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