TPR Reviews Barriers to Pension Investment in Private Markets and Infrastructure

The Pensions Regulator (TPR) has launched a new initiative to examine how defined contribution (DC) and defined benefit (DB) pension schemes approach investment in growth assets, including private markets and infrastructure. The aim is to assess how these investments could strengthen long-term returns for savers and to identify the barriers preventing greater allocation to these areas.

Momentum has been building across the sector. Through the voluntary Mansion House Accord, 17 workplace pension providers have committed to increasing investment in private markets by 2030. This was followed by the launch of the Sterling 20 partnership, bringing together 20 major UK pension funds and insurers to support similar goals. TPR has also issued guidance to help trustees evaluate the full range of private market opportunities to improve outcomes for savers.

In the current phase of its work, TPR is using its sector insights to understand the range of market opportunities and investment vehicles available to pension schemes, their limitations, barriers and enablers, with an emphasis on UK investment opportunities.

The government’s industrial strategy presents opportunities for pension schemes to invest over the longer term in growth sectors, such as science and technology. By providing insights from across the market, TPR wants to help to create the conditions for schemes to consider investing in a pipeline of assets with long-term benefits for pension savers.

TPR is focusing on DC and DB schemes, with material scale, which may be considering or have the potential to make investments in this area.

TPR plans to complete this engagement by the end of 2025. TPR will share findings with Government and will publish a market oversight report, next year, so that trustees and expert advisers can benefit from the insights that TPR has gained.

Chief Executive Nausicaa Delfas said: “TPR is uniquely placed to engage directly with DC and DB schemes to better understand their approach to investing in private markets and infrastructure, as well as the current challenges and barriers they face. We hope our research will provide insight to help trustees consider investment in diverse assets to achieve better returns for savers.”

Through TPR’s ongoing engagement with master trusts and other DC schemes, we see indications that the market is already responding to the Mansion House commitments with trustees considering more diversified investment strategies.

Executive Director of Market Oversight Julian Lyne added: “In the coming months, we plan to ramp up our work to encourage high standards of trusteeship and scheme governance. We expect trustees to acquire the skills, capabilities and access to professional advice to consider investing in diversified portfolios.

“Where schemes fall short, we will be asking trustees to consider whether it would be in savers’ interests to consolidate into larger vehicles with greater investment capabilities.”