Rachel Reeves Credit: HM Treasury Flickr
The chancellor is set to announce a new version of the voluntary Mansion House Compact that will see providers commit to investing 10% of assets into unlisted assets by 2030, with half of that devoted to the UK, reports say.
On Saturday, The Telegraph said a first draft of Mansion House Compact II was circulated last week following what it said were several rounds of "sometimes tense negotiations" between Treasury ministers, the industry and the City of London Corporation, which is coordinating the talks.
It reported that Reeves is expected to announce the revamped compact this summer.
The move comes nearly two years after the launch of the initial Mansion House Compact was announced in July 2023 – which saw signatories pledge to allocate at least 5% of defined contribution (DC) default assets to unlisted equity by 2030.
A total of nine organisations – Aegon, Aviva, Legal & General, M&G, Mercer, Nest, Phoenix (Standard Life), Scottish Widows and Smart Pension – initially signed the pledge, with Aon and Natwest Cushon also joining the initiative later.
But, while 11 master trust and GPP providers signed up to the initial compact, a substantial number of major players did not sign-up – a lack of broader participation the government and industry is understood to be hoping to resolve with the Mansion House Compact II.
And, while many of the initial signatories have taken key steps to ready themselves for progress against the Mansion House Compact, only limited assets have so far been invested.
Last July, the Association of British Insurers (ABI) published an update on the progress Mansion House Compact signatories had made against their pledge – finding that, as at February 2024, signatories held nearly £800m (£793m) of unlisted equity assets in their DC default funds at the end of February 2024, equivalent to just 0.36% of the total value of their DC default funds (£219bn).
It said that, while there had been limited progress in terms of assets invested, however, the ABI said firm's had made key enabling steps to ready themselves for progress on the industry-led initiative – with ten of the 11 signatories having taken steps to establish or expand their expertise in unlisted investment through areas such as training or recruitment; and the same number commissioning or undertaking research into prospective unlisted equity investments.
Furthermore, the ABI said eight of the 11 had started developing specific solutions to enable increased unlisted equity investment, such as Long-Term Asset Funds (LTAFs).
The ABI, however, said the increasing allocations came "despite key operational and technical barriers to investment in private assets", which it said had been identified by individual signatories – several of whom had highlighted the need for policymakers to focus on value for money instead of solely cost.
