The Lady Mayor of the City of London Dame Susan Langley
We don’t often talk about the fact that, for some UK savers, their pension pot is likely to become their single largest asset – even bigger than their home.
There is plenty of discussion across the industry about performance benchmarks and charge caps, and rightly so. But we risk losing savers from the conversation altogether between the moment they are auto-enrolled and the day they eventually retire.
Today, I welcomed senior figures from across the pensions and private capital landscape to Mansion House for our conference, Connecting Capital: Workplace Pensions and UK Growth. One of the great strengths of the mayoralty is its convening power – and the conference has employers, trustees, master trusts, consultants, providers, asset managers, growth capital investors, and policy and regulatory representatives around the table.
That matters because no single organisation controls retirement outcomes. Every link in the pension value chain is crucial to what savers ultimately receive, yet too often each part operates in isolation, pointing to barriers elsewhere in the chain. If we want better results – that is better returns for savers – everyone needs to be part of the same conversation.
Other countries show us that better outcomes are within reach. Australia and the United States channel pension savings into domestic growth sectors, where that capital funds innovation, sustains local jobs and delivers stronger returns for savers.
The UK, by contrast, offers tax relief on pensions while providing too little incentive to invest in British businesses. The result is that UK savers miss out on returns, UK companies miss out on capital, and the Exchequer misses out on the tax receipts that a growing economy would generate – all while our savings support jobs, R&D and innovation overseas.
Growing ambition
The ambition to change this is already on the table. Last year, the City Corporation launched the Mansion House Accord, a commitment by 17 of the UK's defined contribution pension providers to allocate 10% of default fund assets to private markets by 2030, with at least half invested in the UK.
The Accord has the potential to unlock £50bn of new capital, £25bn of it directly into UK high-growth businesses, infrastructure and clean energy, diversifying saver portfolios while supporting British growth.
For the Accord to deliver, we need a clear pipeline of investable UK opportunities placed firmly in the shop window, alongside confidence that the chokepoints will be cleared so capital can flow.
That is why the government partnered with the City of London Corporation to launch Sterling 20. The aim is for Sterling 20 to become the government's trusted route for testing and shaping priority investment propositions: targeted, disciplined, investor-led and focused on turning policy ambition into commercially credible opportunities.
As these mechanisms come together, we also need a whole-system shift in how we think about value for money.
For too long, workplace pension decisions have focused too heavily on cost. A relentless pursuit of the lowest fee can crowd out the investments most likely to deliver stronger long-term returns. The right question is not, "What is cheapest?" but, "What will deliver the best retirement for our people?" That means weighing investment performance, member experience, retirement support and cost together.
The role of employers
Employers have a bigger role to play than is sometimes recognised. We cannot treat pensions as a compliance requirement or a tick-box exercise, revisited only when a contract comes up for renewal.
Employers have significant influence over the pension providers and advisers they choose. The Employer Pension Pledge, launched last year, was designed to give employers a platform to help lead that cultural shift by committing to a value-for-money approach when selecting or changing pension providers.
The next step is to make that thinking part of the routine in boardrooms of every size.
More work to do
At today's conference, we will work towards developing a set of principles: prioritising long-term saver outcomes, supporting access to growth and diversification, and assessing value across the entire delivery chain.
These principles will offer practical questions for employers, consultants, trustees and providers alike. They will also propose that each organisation names a senior individual responsible for keeping pension outcomes on the governance agenda. We want delegates to tell us candidly whether the approach works, and whether large corporates and small businesses need different tools.
We will also take an honest look at what still holds back investment in private markets: how we build a deep and investable pipeline, deliver the value-for-money framework in full, and find practical solutions on liquidity and secondaries.
Some barriers are genuine constraints; others may be overcome through innovation, collaboration and greater industry commitment. With the full value chain around every table, our discussions are designed to distinguish between the two and be clear about who needs to act.
There is undoubtedly more work to do. Success will be measured in capital deployed, projects financed and, above all, better outcomes for savers.
Dame Susan Langley is The Lady Mayor of the City of London
