Almost three quarters of UK defined contribution (DC) pension schemes are planning to access private markets through Long Term asset funds (LTAFs), according to research from Schroders in association with Longview Networks.
The survey found 69% of UK DC schemes intend to use LTAFs, showing momentum for the structure nearly three years after Schroders launched the UK’s first LTAF, Climate+.
DC schemes build retirement savings through contributions invested over time, with outcomes depending on market performance. Defined benefit ( DB) schemes provide a promised income in retirement, typically linked to salary and service, with the employer bearing the investment risk.
Around 74% of respondents expect to raise private market allocations in growth-phase strategies, while 59% anticipate increasing exposure in retirement-phase portfolios. 53% said they had increased private equity exposure at their most recent investment review, with risk-adjusted returns cited as the primary driver.
More than a quarter of schemes expect to significantly increase UK private markets exposure, with 25–49% of their private markets allocation invested in UK assets.
Under the Mansion House Accord, a voluntary pledge by major UK pension schemes plan to allocate at least 5% by 2030 to support growth in the real economy.
40% of respondents increased UK infrastructure exposure at their last review, while 35% boosted allocations to private debt. Renewable infrastructure was seen as the most attractive net-zero opportunity by 82% of schemes.
DC schemes are split on whether greater scale is needed to unlock capital for UK productive assets, according to the findings. 38% said they already have sufficient scale, while 34% believe barriers extend beyond size. Instead, the most common constraint is deal flow, with 68% citing a lack of suitable opportunities as the main barrier to investing in UK private markets.
Ryan Taylor, head of UK DC clients at Schroders, said: “The DC landscape is changing rapidly, and the Pension Scheme Bill and Mansion House Accord will reshape the investment landscape. Our inaugural DC Investment Survey looks at these seismic shifts driving the industry and shaping DC investment.
The biggest winner would appear to be LTAFs with nearly three in four DC schemes planning to structure their private market investments through the investment vehicle. At the same time, more than a quarter plan UK private market allocations significantly above those encouraged by the Mansion House Accord, suggesting growing momentum behind this investment trend.”
The survey is based on 56 responses from master and single trust DC schemes, representing more than £198 billion in assets under management and more than 70% of Mansion House Accord master trust signatories.
