Mansion House II: Old Compact, new Accord

In this third blog on the Mansion House reforms, by way of an update to our second, we turn our attention to the new Mansion House Accord and how it relates to the old Mansion House Compact. This is a different strand of Government policy – it is not legally binding, but rather a voluntary code aiming to increase investment in unlisted equity.

The Compact

The original “Mansion House Compact” was announced in 2023 by the then Chancellor, Jeremy Hunt. It is a voluntary, non-binding agreement between 11 of the UK’s largest DC pension providers to allocate five per cent of assets in their default funds to unlisted equities by 2030. However, while many of the initial signatories are understood to have taken key preparatory steps, only limited amounts have so far been invested. The Association of British Insurers published a report one year on from the Compact launch in which it noted that Compact signatories then held nearly £800m of unlisted equities in their DC default funds – just 0.36 per cent of their DC default fund total. To be fair, their default funds also held a further £5.7bn in infrastructure assets structured as unlisted equity, but such investments were explicitly excluded from the scope of the Compact.

The Accord

Having been hotly anticipated by pensions and news publications, on May 13, 2025, the new Mansion House Accord was announced. Under the Accord, pension providers’ commitment to investing 10 per cent of their default funds in unlisted assets by 2030, with half of that devoted to UK assets. An impressive 17 providers, responsible for approximately 90% of active DC savers, have signed up. Importantly, the Accord sits alongside the Compact rather than replacing it: the Compact concerns only unlisted non-infrastructure equities, while the Accord’s higher targets also cover property, credit, and unlisted infrastructure equities.

Fine print

The ABI’s report outlined several barriers that Compact signatories experienced in the first year, including finding the right fee structures, employer focus on costs rather than value, managing appropriate liquidity and restrictions imposed by legacy terms and conditions. These barriers will only be thrown into sharper focus by the Accord. The text of the Accord is crystal clear that the ambitions are dependent on a range of facilitative actions by the Government and regulators, as well as changes in market expectations.

Where does that leave mandatory investments

The Compact and Accord are voluntary, but were developed in the shadow of legislative proposals to mandate investment allocations. The Government will no doubt be pleased by the level of support in the industry for the Accord, but will also be keeping a close eye on progress. One way or another, it looks like default funds will increasingly feature unlisted assets, with particular growth in domestic investment.