Legal & General, Natwest Cushon and Royal London are among 17 workplace pension providers who have signed a voluntary initiative called the Mansion House Accord, which ministers say could release £25bn into the UK economy by 2030.

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

At least 5% of these portfolios will be ringfenced for UK investments, including stakes in private British businesses, property and major infrastructure projects.

The deal doubles the Mansion House Compact, signed between the pensions industry and then Conservative Chancellor Jeremy Hunt in July 2023, to boost UK investment. In the earlier deal, pension funds committed 5% of their workplace portfolio assets.

Audley Group founder and chief executive Nick Sanderson says: “The signing of Mansion House Compact II could be pivotal for the later living sector, with institutional investors turning to home soil to generate returns. £1.25bn was invested in the sector in 2024 as investors recognised the sector’s ability to deliver secure inflation-linked returns.

“This, coupled with the government’s recognition of integrated retirement communities within the modern housing mix, could accelerate the growth of housing that is tailored to the needs of our population.

“There is a window of opportunity to be seized. One that could have far-reaching benefits for both our ageing population and pension savers.”

But Evelyn Partners managing director Jason Hollands adds: “The gnawing concern is that this ‘voluntary’ commitment is really a case of the government wielding a stick rather than offering a carrot — unless the UK pensions industry has suddenly become a lot more bullish on private markets in the space of two years? Media reports suggest that the threat of mandatory allocations has been a factor.

Hollands points out: “Also, could this be the thin end of the wedge in terms of the government trying to co-opt pension funds into helping drive its objectives?

“However desirable those objectives might be – like boosting economic growth – from a public policy lens, the fear is that pension schemes could be distracted from the interests of the end saver, which should be their primary concern.”

Chancellor Rachel Reeves says: “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.”