David Whitehair, chair of the Defined Contribution Investment Forum, argues against mandation of asset allocations and instead calls for investible assets and better governance.
As chair of the Defined Contribution Investment Forum (DCIF), I welcome the growing momentum behind calls to align long-term pension capital with long-term UK growth. The ambition, shared by industry and government, is to ensure that Britain’s retirement savings help finance its future.
However, making this compulsory may not be the best way forward. The idea of requiring defined contribution (DC) pension schemes to allocate a fixed portion of their portfolios to UK private markets might sound compelling in theory. In practice, it risks undermining the very principles that make our pension system work: trust, fiduciary responsibility, and long-term value creation.
“In Chile, years of state-directed pension fund investments led to distortions, underperformance, and declining public confidence in the pension system.”
David Whitehair, DCIF
At our recent annual event it was not surprising to me that a live poll, conducted among the diverse gathering of professionals, showed that fewer than a third supported a top-down requirement for schemes to invest in UK private markets. Indeed, a new report we produced together with Daniela Silcock Pensions Research examines how politics, policy, and market dynamics are reshaping the investment landscape for UK DC pension schemes.
Drawing on interviews with chief investment officers and other key industry stakeholders, it highlights the risks of unintended consequences and warns against eroding public trust through mandates that may not be in members’ best interests. The report also identifies real opportunities for DC schemes to contribute to UK growth while delivering strong outcomes for members.
Areas such as infrastructure, affordable housing, and climate technology are attracting interest, particularly where investments offer inflation protection, long-term returns, and visible impact.
Maintaining trust in the UK pension system
The dangers of forced investment are not theoretical. We have seen the consequences of politicised pension allocations elsewhere.
In Chile, for example, years of state-directed pension fund investments – often into politically favoured or domestic assets – led to distortions, underperformance, and declining public confidence in the pension system.
Our position is simple. We believe that a well-governed, well-prepared investment ecosystem – one that empowers schemes rather than compels them – is the surest route to unlocking capital. DC schemes want to invest in productive assets, but a strong pipeline of attractive assets is a critical first step.
In addition, they need the right structures, scale, and governance support to do so confidently and responsibly. What is needed is an investment pipeline that is not just investible, but truly suited to the DC model: scalable vehicles, better cost transparency, alignment with decumulation needs, and governance frameworks that enable trustees to make informed, risk-adjusted decisions.
The goal must be to build access, not impose obligation.
The right investments in the right way
We do not underestimate the urgency of the government’s mission. Britain needs patient capital. But it also needs confidence in the institutions stewarding that capital.
Forcing schemes to direct members’ money into politically favoured projects may erode the trust that is foundational to pensions. It invites short-termism, distorts incentives, and could even damage long-term returns.
This is not a question of willingness. Many pension schemes are eager to engage with UK private markets and are already doing so – when the investment case is clear and the vehicle is fit for purpose.
We are aligned in our ambition: to see the UK DC market evolve into one that supports innovation, infrastructure, and long-term economic growth. But we must get there through capacity-building and collaboration, not compulsion.
This is a critical moment for the UK pension system. As the government pushes ahead with the Mansion House agenda, we need to ensure that long-term investment decisions remain grounded in member outcomes.
There is an uncomfortable truth at the heart of this debate: it is DC members – often with the fewest protections and lowest levels of engagement – who are being asked to shoulder the risk of change. This must remain at the forefront of our minds.
David Whitehair is chair of the Defined Contribution Investment Forum.
