Chancellor of the UK, Jeremy Hunt, delivered his first Mansion House speech on Monday 10 July, unveiling reforms that present a potential £75bn boost for private equity from UK pension funds. This marks a very positive move for the private markets industry to give a growing number of investors access to the asset class.
Below is a summary of the key messages around ‘direction of travel for pensions’
- The UK represents the largest pension market in Europe worth +£2.5tr. These reforms aim to unlock better returns for savers and more growth capital for businesses.
- “Mansion House Pact” sees CEOs of the UK’s largest DC pension schemes committing to increase their allocations to unlisted equities to at least 5% by 2030.
- Estimated Headline figure, if all similar schemes follow suit, unlocks an additional £50bn of capital to unlisted equities.
- Consolidation of DC pension schemes to achieve the best outcome for members, through scaling to optimise returns.
- Local Government Pension schemes in focus – Consulting on both consolidating pension schemes and doubling existing pension scheme allocations in Private Equity to 10%, which would unlock a further £25bn for investment by 2030.
As the industry continues to democratise, it is vital that this is supported with a scalable yet robust approach to KYC. Many current KYC processes still rely on outdated and siloed practices that are a barrier to access. Connecting private markets fund managers with investors via a central hub is an industry-wide solution for this industry-wide challenge.