UK defined contribution (DC) master trusts are rapidly increasing their allocations to illiquid assets following the Mansion House Accord, with funds looking at private debt allocations in the retirement segment of their glidepath, new research has found.
A white paper by independent consultant Isio, which analysed 13 UK DC master trust providers and 18 default strategies, found that over the past 12 months master trusts have increasingly adopted a single-default approach incorporating material allocations to illiquid assets.
The increasing allocations follow the Mansion House Accord, signed in May 2025, a voluntary initiative under which 17 major UK pension providers committed to investing at least 10 per cent of their DC default funds in private markets by 2030, with five per cent specifically directed towards the UK.
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Across the 18 defaults containing illiquid assets in the latest survey, 16 have planned allocations to private equity, 14 to private debt, 17 to infrastructure and 15 to real estate.
Across the glidepath of the DC funds’ investments, asset allocation to illiquid assets shifted, with private equity proving the most popular asset class during the growth phase, while private debt plays the dominant role in the run-up to retirement.
“With allocations to illiquids at or around retirement becoming more common, we are also pleased to see the increased use of private debt,” the Isio survey said. “Despite recent press, we see this as one of the more attractive illiquid asset classes on a risk-adjusted basis.”
Isio’s research stated that DC providers are well on track to achieve the target 10 per cent allocation to illiquid assets set out in the Mansion House Accord, but are making less progress towards the five per cent UK allocation target.
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