Up to £50bn of investment for UK businesses and major infrastructure projects is set to be unlocked through a new agreement with Britain’s biggest pension funds.

Seventeen workplace pension providers managing around 90% of active savers’ defined contribution pensions have signed the Mansion House Accord.

Signatories to the accord have pledged to invest 10% of their workplace portfolios in assets that boost the economy in areas such as infrastructure, property and private equity by 2030.

At least 5% of these portfolios will be ringfenced for the UK, expected to release £25bn directly into the UK economy by 2030. 

This investment could support clean energy developments across the country, delivering greater energy security and helping to lower household bills, as well as delivering growth finance to Britain’s science and technology businesses.

The pledge follows the of securing trade agreements with India and the US, which will add billions of pounds to the UK economy and protect thousands of steel and car manufacturing jobs, as well as a fourth interest rate cut since last summer.

Chancellor Rachel Reeves said: “Through our Plan for Change, we are choosing to back British businesses and British workers. I welcome this bold step by some of our biggest pension funds, which will unlock billions for major infrastructure, clean energy, and exciting startups — delivering growth, boosting pension pots, and giving working people greater security in retirement.”

Torsten Bell, minister for pensions, added: “Pensions matter hugely, they underpin not just the retirements we all look forward to, but the investment our future prosperity depends on.

“I hugely welcome the pensions industry decision to invest in more productive assets, from growing companies to infrastructure. This supports better outcomes for savers and faster growth for Britain.”

The new deal builds on the 2023 Mansion House Compact, where 11 funds committed to the aim of investing 5% of their workplace defined contribution default funds – the off-the-shelf funds providers offer to the vast majority of savers - in unlisted companies by 2030.

The new commitment involves the vast majority of the industry and brings more assets into scope, doubles the target from 5% to 10%, and includes a specific commitment to investing 5% in the UK.

Some pension funds have already indicated privately that they will go beyond the targets agreed through the Mansion House Accord, which could lead to even more direct investment in the UK economy – which has been welcomed by the government.

Signatories to the new commitment include: Aegon, Aon, Aviva, Legal & General, LifeSight, M&G, Mercer, Natwest Cushon, Nest, NOW: Pensions, Phoenix Group, Royal London, Smart Pension, the People’s Pension, SEI, TPT Retirement Solutions and the Universities Superannuation Scheme (USS).

Amanda Blanc, Aviva group chief executive officer, said: “This is a major opportunity for the pension and investment industry to support UK growth while delivering improved outcomes for pension savers.

“As a significant investor in private markets, Aviva has recently launched a number of funds to give over four million workplace pension customers even greater opportunity to invest in UK assets, including innovative, early-stage businesses, and we want to do much more.”

Yvonne Braun, director of policy, long-term savings, health and protection at the Association of British Insurers (ABI), said: “As major investors, the pensions industry already plays a vital role in driving growth in the UK and globally. The accord formalises the industry’s ambition to invest more in private markets to diversify investments, support innovation and infrastructure, and ensure prosperity. 

“Investments under the accord will always be made in savers’ best interests. It is now critical that government supports the industry’s ambition, by facilitating a pipeline of suitable investment opportunities, tackling barriers to investments, and delivering wider pension reforms effectively."