The UK economy is expected to benefit from increased investment from pension schemes in 2026, with the help of master trusts and asset managers. The Mansion House Accord, signed by 17 major pension providers in May 2025, showed a willingness to allocate more funds to domestic investments.
However, the Pension Schemes Bill, which includes a controversial “backstop” clause, has caused tension among trade bodies, including Pensions UK, the Society of Pension Professionals, and the Pensions Management Institute. Despite opposition, pensions minister Torsten Bell and chancellor Rachel Reeves have held firm, and the clause remains as the bill makes its way through the House of Lords.
According to Dan Mikulskis, chief investment officer at People’s Partnership, the government needs to facilitate a pipeline of UK-based projects for schemes to invest in. This can be achieved through improvements to the planning and grid connection processes. Jayesh Patel, head of UK DC distribution at Legal & General, suggests that expanding auto-enrolment will increase the flow of pension capital into the UK economy.
He recommends lowering age thresholds and increasing contribution levels over a phased period to ensure broader participation. Simon Cunnington, UK Opportunities portfolio manager at Border to Coast Pensions Partnership, emphasizes the importance of policy certainty to give investors confidence in committing to the UK.
Ronan O’Riordan, head of UK and Ireland business development at Schroders, highlights the need for a thriving UK-listed market to support the growth of public companies and attract listings. He welcomes research suggesting that requiring DC default funds to adopt a “UK weighted” asset allocation could make a meaningful difference to domestic investment.
As the UK economy looks to 2026, pension schemes are expected to play a significant role in supporting domestic investment. With the right support and frameworks in place, schemes can invest in high-quality opportunities, delivering strong returns and contributing to economic growth.
Andrew Doyle, lead investment adviser at LifeSight, expects schemes to make progress towards the Mansion House Accord goals in 2026. Dan Mikulskis notes that the government needs to help facilitate a pipeline of UK-based projects that schemes can invest in.
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Jayesh Patel believes that the Mansion House Accord is a vital initiative for channelling capital into the UK and helping the government deliver on its growth mission.
Dan Mikulskis identifies the lack of a pipeline of suitable projects as one of the biggest challenges facing schemes trying to allocate domestically. Simon Cunnington notes that pooling in the Local Government Pension Scheme has helped solve one issue, but policy support and frameworks are needed to support a continued pipeline of high-quality investment opportunities.
Jayesh Patel highlights the challenges faced by smaller schemes in making the most of domestic allocations, but believes that measures proposed under the government’s Value for Money framework will help address these challenges.
The biggest opportunity in domestic investment, according to Dan Mikulskis, lies in UK real assets. Simon Cunnington identifies thematic opportunities in the UK, such as life sciences, housing, and energy infrastructure, which stand out as areas for investment.
Ronan O’Riordan emphasizes the importance of ensuring schemes choose the right investors with the relevant expertise and resources to partner with. Jayesh Patel sees a huge opportunity in UK productive finance assets, which can deliver attractive returns for investors alongside meaningful contributions to growth in the real economy.
As the UK economy moves forward, pension schemes will continue to play a vital role in supporting domestic investment. The government’s efforts to facilitate a pipeline of UK-based projects and improve policy certainty will be key in giving investors confidence in committing to the UK. With the right support and frameworks in place, schemes can invest in high-quality opportunities, delivering strong returns and contributing to economic growth, which is similar to the growth seen in other markets.
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