Millions of pensions could see boost amid 'game changer' initiative

Millions of pension pots could be boosted amid plans for a new fund linked to private equity and infrastructure investments. Legal & General (L&G) is set to divert billions of pounds from British workplace pensions into the scheme.

The company said it would “unlock private market access” for 5.2 million members of modern defined-contribution schemes. L&G operates workplace pension schemes for employers including Tesco and NatWest.

A spokesperson has said its new fund would feed savers’ cash into private equity, private debt and infrastructure. The new fund will have a substantial bias towards the UK, with an aim of placing 30-35 percent of employees’ savings in British assets, The Express reports.

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This is much higher than the typical four per cent seen in typical share portfolios and could provide vital cash investment needed to boost UK economic growth. Both the Conservative and Labour parties have announced plans to try to divert more pension fund money into productive British assets, with some experts calling for mandatory UK allocations.

The fund is set to be called the L&G Private Markets Access Fund and could attract £500 million of savers’ money by the end of this year, £1 billion to £2 billion by the end of 2025 and then to “grow exponentially from then on”.

Pension schemes run by London Stock Exchange Group and EDF, the French energy company, have already expressed an interest, while dozens more are potential customers, including L&G’s own staff pension scheme.

Rita Butler-Jones, head of defined-contribution pensions at L&G, said: "We’ve seen a very strong appetite across employers we’ve spoken with.” She added that the move was “a significant milestone for UK pensions” and “a game-changer for defined contribution (DC) pensions”.

L&G is one of the biggest so-called master trusts, used by employers auto-enrolling staff into pension saving. It also operates single company schemes. Other employers using L&G for staff pensions include Marks & Spencer, Kingfisher and Greggs.