A shortage of suitable UK investment opportunities could hamper efforts to increase pension scheme allocations to private markets, the Pensions Regulator (TPR) has found.
Research published by TPR on Monday found UK private market investments would generally be considered where they met schemes’ requirements on expected returns, risk, diversification, cash flow, and liquidity.
However, stakeholders surveyed by the regulator identified a lack of investable UK opportunities with the right characteristics as a critical barrier to delivering the ambitions of the Mansion House Accord.
Some schemes have avoided setting hard targets for UK investment because they wanted to ensure investments remained in members’ best interests and in line with fiduciary duty, the research found. TPR also reported that trustees were concerned about a potential conflict where UK assets offered lower expected returns than alternative opportunities.
“Our research can help government and industry understand what’s getting in the way and where action could unlock investment that benefits members and the wider economy.”
The regulator’s findings are based on engagement with more than 40 stakeholders, including pension schemes, trustees, consultants, industry bodies, and investment managers.
Ben Gunnee, executive director of market oversight at TPR, said: “Pension schemes want to invest in private markets, but many schemes are currently experiencing practical barriers that limit their opportunity for investment.
“Our research can help government and industry understand what’s getting in the way and where action could unlock investment that benefits members and the wider economy.”
DC progress, but DB appetite limited
TPR found significant progress among defined contribution (DC) schemes and master trusts with sufficient scale and governance capacity. Most master trusts already had some exposure to private markets at the end of 2025, although material allocation levels remained less common.
Some multi-employer master trusts are targeting at least 10% of assets in private markets by 2030, including at least 5% in the UK – the goal of the Mansion House Accord – while others have targets of 20% or more.
In July, Pensions Expert reported that Nest had committed an initial £200m to a venture capital strategy managed by Schroders Capital, with the ambition of increasing the allocation to £1bn by 2030.
Nest and Railpen are also among the pension providers exploring a £1bn-plus fund targeting UK scale-up businesses.
However, TPR found appetite for venture capital remained relatively limited across the wider market. Schemes that had invested tended to favour later-stage and scale-up opportunities, while private equity, private credit, infrastructure and property attracted greater interest.
The findings echo those from a Pensions Expert survey of DC providers, conducted in conjunction with CACEIS. The results will be presented at the Pensions Expert DC and Master Trust Summit in St Albans on Tuesday (22 September), and published in due course on the Pensions Expert website.
The picture is different among defined benefit schemes. Most had limited appetite to commit further capital to private markets because stronger funding positions have reduced the need for growth assets, while illiquid holdings could restrict flexibility if schemes later seek to transfer benefits to an insurer.
TPR also highlighted knowledge gaps, opaque fee structures, inconsistent reporting and regulatory and policy uncertainty as barriers to further investment – findings also repeated in Pensions Expert’s research.
The regulator said trustees should review their private markets expertise, adviser support, governance capacity and risk controls, and consider how their schemes could develop over the next five to 10 years.
