More than 250 UK company bosses have co-signed a letter to chancellor Rachel Reeves calling for UK defined contribution (DC) default funds to be forced to allocate 25% of all asset classes to the UK.
Executives – including the CEOs of Schroders and the London Stock Exchange and the chairs of Barclays, Anglo American, Kier Group, and Babcock – called for Reeves to “condition the privileges that are granted to UK DC pension scheme default funds upon them allocating a minimum 25% of their default fund assets to UK investments – across each asset class”.
The call comes despite significant efforts from policymakers and pension schemes over the past few years to allocate more to the UK, with many of the country’s largest schemes and providers signing up to the Mansion House Accord and Compact, as well as the Sterling 20 initiative.
However, much of this work has focused on private markets. This week’s letter – led by Don Robert, chair of London Stock Exchange Group, and David Schwimmer, its CEO – focuses instead on listed markets.
The letter stated: “The availability of domestic risk capital is the vital fuel that businesses, both public and private, need to grow. Yet, we are increasingly concerned by the sharp decline in domestic risk capital – especially from UK pension funds – being invested in companies in the UK.”
“Condition the privileges that are granted to UK DC pension scheme default funds upon them allocating a minimum 25% of their default fund assets to UK investments – across each asset class.”
Business leaders’ letter to Rachel Reeves
It claimed that pension schemes’ domestic equity exposure had fallen from 53% in 1997 to 4.1% in 2025, although it did not source this data or specify what schemes this data covered.
The letter also claimed that “projections” showed that DC funds’ allocation to UK equities would continue to fall to 3.5% by 2030.
How pension schemes are already supporting the UK economy
A report published in May highlighted the economic benefits of existing pension fund allocations, while arguing that these investors must maintain independence in order to succeed. Read the full article.
‘UK-weighted’ default funds
Recent policy moves such as the Mansion House Accord and Sterling 20, both announced within the past six months, were “welcome”, the letter stated, but it claimed that “more is needed to translate them into actual investment flows”.
The signatories argued that the government could introduce a requirement for all DC pension schemes to “designate a ‘UK-weighted’ fund as their default arrangement”.
The UK pensions industry has voiced strong opposition to threats of mandation, including the clause in the Pension Schemes Bill that gives the government power to direct investments into certain asset classes.
However, the letter argued that a UK-weighted default approach would not be mandation because “any individuals preferring not to have their pension invested in the UK-weighted fund could opt for a different allocation strategy”.
Signatories also argued that this action “would be in line with the perceptions of the British public”, citing a New Financial poll that found that “the public believes 41% of their pension is invested in UK companies or the UK stock market”.
Rachel Reeves is due to deliver her Budget speech on 26 November.
