Pension schemes want to invest in private market assets but face a number of barriers, The Pensions Regulator has warned.
Drawing on engagement with more than 40 stakeholders from across the pensions and investment industry, TPR found schemes are interested in private market investments, including UK infrastructure, where they align with their investment objectives and fiduciary duties.
Larger schemes with greater scale, governance capability and better access to specialist investment expertise are generally better placed to invest in private markets, the research showed.
However, barriers including capability and knowledge gaps, opaque fee structures, limited transparency and a lack of suitable investment opportunities are preventing schemes from investing capital at the pace and scale they could while continuing to deliver good outcomes for members, TPR said.
Workplace pensions currently hold around £2 trillion of assets and are systemically important to the UK economy.
TPR’s report encourages trustees to work with advisers and assess whether they have the scale, expertise and governance capabilities needed to invest. This starts with member outcomes, scheme strategy and risk profile and planning ahead for how their scheme may change over the next five to 10 years.
Ben Gunnee, executive director of market oversight at TPR, said: “Pension schemes want to invest in private markets, but many schemes are currently experiencing practical barriers that limit their opportunity for investment.
“Our research can help government and industry understand what’s getting in the way and where action could unlock investment that benefits members and the wider economy.”
TPR’ s report highlights the role government, regulators and industry can play in improving the conditions for schemes to consider a broader range of investment opportunities where these are in members’ interests, from shaping supportive policy to strengthening capability and governance across the sector.
Torsten Bell, minister for pensions, said: “Pensions are a huge source of potential investment in this country, and we want schemes to be able to back UK growth as well as deliver good outcomes for their members.
“This research moves us closer to understanding the barriers holding schemes back, helping us work with industry to unlock investment that supports a stronger economy and better retirements for savers.”
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