UK pension investment in private markets held back by lack of opportunities, says PMI

Pension schemes in the UK might consider increasing their investments in private markets if government policymakers concentrate on enhancing the availability of attractive investment opportunities instead of setting strict allocation targets, according to a report by Pensions Age. Ruston Smith, the chair of the Pensions Management Institute (PMI), shared these views in his blog post.

He suggested that stronger links between institutional capital and investment opportunities could stimulate more pension funds to invest in infrastructure, real assets, and private companies.

Smith advocated for the UK to focus on creating a pipeline of commercially viable projects, backed by robust governance, operational capabilities, and investment advice. He pointed out the City of London Corporation’s newly established InvestConnect platform as a possible tool to facilitate connections between pension investors and suitable private markets opportunities.

This platform aims to broaden access to investment projects and facilitate institutional investors in discovering projects that align with their long-term goals.

Smith emphasized that pension allocations to private markets should be guided by investment fundamentals rather than arbitrary government targets. He suggested that pension schemes should evaluate opportunities based on their own governance capabilities, scale, and return requirements. Additionally, he underscored the significance of trustee expertise, transparent reporting, and long-term decision-making in fostering greater private markets investment.

These insights were shared as the UK government aims to encourage pension funds to invest more capital in domestic private markets, particularly in infrastructure and growth businesses.