How quality private market opportunities could improve outcomes for pension savers

Public markets are the backbone of DC investing. Even so, recent market swings have prompted employers and advisers to look for diversification that can better support members’ long-term returns.

Volatility is now a regular feature of markets, and we’ve seen periods when traditional diversifiers move together. By widening the investable universe beyond what’s listed, private markets open the door to parts of the economy DC schemes haven’t traditionally reached – from private companies and loans to real assets like infrastructure projects.

For context, UK datasets show around 38,400 private mid-sized companies versus roughly 1,550 public listings, so public markets capture only a slice of the economy. That matters, because many savers aren’t on track for retirement.

According to a 2025 UK government report, more than four in ten people are undersaving. DC pension schemes have long been shaped by tight cost constraints, but the direction of travel is towards value and net member outcomes – especially as schemes look for investments that can work harder over the long term.

Balancing opportunities and challenges

Private assets offer opportunities, but they also bring risks and challenges. They’re less liquid, valued less often and need specialist expertise and strong governance to help maximise potential returns. Access alone isn’t enough – performance varies widely between managers, so discipline and manager quality are essential.

To support responsible access, the industry has introduced long-term asset funds (LTAFs) – FCA-regulated pooled routes into private assets with dealing and oversight for long-term investing. They address barriers like scale, administration and liquidity.

Our responsible approach to private markets

Our focus is simple: we aim to design, develop and deliver private markets access to support better long-term outcomes for members. This means thinking long term, diversifying widely, embedding robust governance and keeping investment independence so we can select the right managers for each opportunity.

We launched Future Growth Capital (FGC) – our joint venture with Schroders – in 2024. FGC provides specialist routes for workplace pension schemes into private assets, via FCA-regulated LTAFs. These build diversified exposure across private equity and venture capital, private debt, real assets like infrastructure.

Quality sits at the centre of our approach. The private market landscape is complex, so manager selection matters. Accessing quality opportunities is closely linked to manager skill and access, and that can come with a higher cost profile, which is why schemes need to focus on value for money and net outcomes after fees.

We know that some investments can feel abstract to members. Private assets can be easier to picture – for example, financing affordable housing. This helps members connect with their pension investments and the economy around them.

Taking a measured, long-term approach

Introducing private assets into workplace pension schemes is a carefully managed process. It means building exposure steadily to support diversification across different funding cycles while managing liquidity.

It requires ongoing governance: monitoring managers, reviewing allocations as conditions change and keeping everything aligned with our investment beliefs.

That’s also why schemes weigh cost constraints against the potential to improve net member outcomes over the long term.

Preparing for the next chapter

Private assets complement public ones – they don’t replace them. Global equities, bonds and property will continue to play central roles in pensions investing. What private markets do is broaden the toolkit, offering more ways to balance risk over time and helping to smooth different market conditions.

For employers, advisers and trustees, this means the opportunity to put more of the real economy in members’ reach is here – as long as they take it with care, clarity and conviction.

The value of investments can go down as well as up and could be worth less than what was paid in. Past performance isn't a guarantee of future performance.