Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential contribution of the Mansion House compact on levels of pension investment.

The Mansion House Compact is a voluntary industry-led initiative with eleven signatories to secure better outcomes for defined contribution (DC) savers by increasing pension investment into unlisted equity. The ambition is to allocate at least 5% of the DC default funds to unlisted equities by 2030 and increase the proportion of UK pension and other relevant investments in unlisted equities.

The Government continues to monitor progress on the Mansion House commitments in collaboration with the Association of British Insurers (ABI). An update from the ABI suggests that signatory pension firms are making progress on these ambitions. The ABI’s latest publication highlights that firms have laid strong foundations to implement the commitment of allocating 5% of DC default funds to unlisted equities by 2030. Ten of the eleven signatories to the compact have taken steps to establish or expand their expertise in unlisted equity investment. Furthermore, eight of the eleven signatories have begun to develop specific solutions to enable increased unlisted equity investment.

The Government is also taking further proactive steps to increase investment in innovative businesses. In November, the British Business Bank completed its £250m Long Term Investment for Technology and Science (LIFTS) investment alongside £250m from Phoenix Group with Schroders Capital. The £500m investment vehicle will invest in UK late-stage companies focused on technology and science, with 20% of the fund expected to be invested in life sciences.

Additionally, two UK pension funds, Aegon UK and NatWest Cushon, have agreed to collaborate with the British Business Bank on launching the British Growth Partnership to crowd-in institutional investment into venture capital funds and innovative businesses here in the UK.