Pension funds pledged billions — why UK VCs say the Mansion House Accord is stalling and demand government action

UK Private Capital has issued a stark warning: the ambitious Mansion House Accord, designed to channel billions from pension funds into private markets and kick‑start growth, is running dangerously slow. Despite high‑profile signatories and political fanfare, venture capital firms report little meaningful engagement from the pension providers that pledged to act. The consequences are significant — for the funds, for pension savers and for the government’s broader aim of mobilising long‑term capital into the UK economy.

What the Mansion House Accord promised

Under the Accord — agreed in 2023 — a group of major defined‑contribution (DC) pension providers committed to directing at least 10% of their default fund allocations into private markets by 2030. The target was ambitious but straightforward in intent: unlock roughly £50bn for UK businesses, boost innovation, generate better returns for savers and shore up long‑term growth. Names attached to the initiative include Aegon UK, Mercer, Aviva, Legal & General and Phoenix Group — institutions with deep balance sheets and serious clout.

Reality on the ground: VC funds struggle to engage

UK Private Capital’s research paints a different picture. Venture capital and growth equity managers told the trade body they are finding it “difficult to engage with pension funds”. Of the 83 fund managers surveyed, only six were in active negotiations with signatory pension providers in April and May. Even more striking: only two legally binding commitments aligned with the Accord have been recorded so far. That’s a paltry haul given the scale of the pledge and the time elapsed since it was announced.

Why progress is so slow

Several barriers have been identified by both managers and pension providers:

Pension readiness: many pension schemes are still not operationally or culturally equipped to invest in private markets. Evaluating, monitoring and liquidating private investments demands different capabilities than listed assets.

Process complexity: VC managers say the pipeline to secure commitments is slow and opaque. Negotiations and due diligence can be protracted, especially when pension trustees demand robust governance and liquidity protections.

Quality of deals: pension trustees emphasise a need for investible, commercially viable projects — they won’t sacrifice fiduciary duty for speed. Mercer’s chief executive emphasised patience and quality over rushed allocations.

Regulatory and political caution: the Pension Schemes Act debate exposed tensions about mandation and government involvement, causing some providers to be cautious about fast‑tracking commitments that might later be criticised.

Impact on VC sentiment and the Accord’s credibility

Survey respondents expressed eroding confidence. Nearly half of the VC firms questioned said they were no longer optimistic the Accord would achieve the intended levels of investment by 2030 if current trends persist. The lack of visible traction is damaging both trust and momentum: funds need a steady, predictable inflow of capital to plan new investments, co‑investments and follow‑on rounds.

Government role and the pipeline problem

UK Private Capital has called on government to step up its commitment — not by mandating pension funds, but by delivering a credible pipeline of investable opportunities. The Accord contemplates a public‑sector role in de‑risking and aggregating projects that are sufficiently large and well structured to attract long term pension capital. The amended Pension Schemes Act now requires the government to publish a report identifying barriers to investment into private markets and to explain steps taken to address them — an important accountability move, but one that requires decisive follow‑through.

Trustees, fiduciary duty and the need for caution

Pension trustees face a real fiduciary duty: deliver long‑term returns for savers while managing liquidity and risk. Several trustees have told the market they have capital to deploy but will not compromise on quality. That cautious stance is understandable: private investments can be illiquid and harder to value, and trustees must be confident about governance, exit pathways and downside protection.

What needs to change — practical steps

Build capacity inside pension schemes: hire or develop private markets teams, improve due diligence processes and streamline decision‑making.

Create public‑private pipelines: government should facilitate larger, shovel‑ready projects that fit pension investment profiles.

Enhance transparency: standardise documentation and timelines so VC managers understand the route to commitment.

Promote patient capital structures: design vehicles that balance yield with liquidity and risk mitigants suited to DC funds.

The stakes are high

The Mansion House Accord is not simply a PR exercise. It represents a strategic attempt to re‑orient significant long‑term capital towards UK enterprise and infrastructure. If pension money stays parked in public markets because private markets are deemed too onerous, the opportunity to fund growth, innovation and higher long‑term returns will be squandered. For VC firms, the absence of committed pension capital constrains dealmaking and growth plans. For savers, the risk is that the promise of better returns from long‑duration investments will go unfulfilled.

Conclusion — a call for urgency

UK Private Capital’s message is blunt: time is not on our side. Achieving a meaningful shift of pension capital into private markets requires urgency, better process design and active government facilitation. The Accord’s goals are laudable, but without a credible acceleration in pipeline development, operational readiness within pension schemes, and improved engagement processes, the ambitions risk remaining largely rhetorical. For an initiative that could unlock tens of billions for the UK economy, delay is not just inconvenient — it’s a missed chance.