L&G uncovers private markets appetite among pension savers

Legal & General (L&G) research has found that investors would welcome the integration of private market assets into its defined contribution (DC) pension schemes.

L&G found that nearly three-quarters (68 per cent) of DC savers would feel more engaged with their pension if it was invested in assets like affordable housing.

Meanwhile, 63 per cent agreed that if their pension was invested in clean energy, they’d feel more engaged, while 57 per cent said that allocations to spin-out businesses from university science and technology departments would boost their engagement.

More than half (55 per cent and 52 per cent respectively) of respondents agreed that they would pay more into their pension if it was invested in affordable housing or for allocations to clean energy, with 49 per cent saying the same for innovative start-ups.

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However, of the members polled, 82 per cent were concerned there might be more risk of an investment loss compared with traditional investments.

These concerns were higher among older generations, with 73 per cent of respondents aged 50 or above worried that investing some of their pension money in assets that might not be quickly sold could carry the risk that they will not be able to easily access their pension.

Millennials and gen Zs were particularly positive about the integration of private markets into their pension portfolios, with 74 per cent saying they would feel more positive about their pension if it was being used to help support affordable housing schemes.

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Of generation Z, 81 per cent said they would be willing to pay more for a pension which was helping to drive technology and innovation in the UK, compared with 51 per cent of baby boomers.

“As we see growing allocations of pension capital to private markets, it is encouraging that when savers are aware that their pensions can be used to drive positive real world change, it fosters an increased sense of engagement, wellbeing and connectivity with their retirement pot,” said L&G head of defined contribution Rita Butler-Jones.

“Private markets could therefore not only help to drive greater potential returns across UK pensions, but potentially greater member engagement and contributions too.

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