Standard Life research explores how private markets could play a larger role in future UK pension defaults

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• Private market allocations in DC default funds could rise from today’s 2%-4% to 15%-30% by 2035
• Emerging opportunity for future default funds to invest across private equity, private credit and infrastructure, rather than relying on a single private asset class
• Consolidation likely to see 10 to 15 larger UK DC schemes emerge, helping schemes access investment opportunities already common in markets such as Australia and Canada
• Potential for between £40bn and £200bn of DC assets to be invested in UK private markets by 2035

Private market investing could play a larger role in the evolution of pension defaults in the UK over the next decade, according to new analysis from Standard Life and WPI Economics.

The report, From Scale to Impact: A Blueprint for the Future DC Pensions Market, explores how consolidation and pension reforms could reshape how default funds invest. It sets out how larger schemes could build more diversified portfolios and increase exposure to private markets.

With a long-term outlook, the research projects that the UK workplace DC market could be dominated by 10 to 15 larger pension schemes by 2035, each managing more than £50 billion of assets. Under this scenario, default funds could potentially allocate between 15% and 30% of assets to private markets during the growth phase of retirement saving, compared with around 2% to 4% today.

It’s also anticipated that the range of private assets within defaults will broaden. Rather than concentrating exposure in a single asset class, the blueprint sets out a scenario in which future default funds invest across a broad mix of private market assets. Private equity and venture capital could account for 30% to 50% of private market allocations, private credit 20% to 40%, and infrastructure and real assets 20% to 40%. This mix could support more diversified portfolios and stronger long-term outcomes for savers by combining different sources of return and risk.

The report suggests private credit is likely to play an increasingly important role in helping schemes manage liquidity and downside risk. Infrastructure investments could provide long-term, inflation-linked cashflows and diversification benefits, helping to smooth returns over time, while private equity and venture capital are expected to remain important drivers of long-term growth and value creation.

The findings indicate that UK DC schemes could begin to look more like their international counterparts. Australian superannuation funds currently invest around 17% of assets in private markets, with some growth-stage strategies allocating up to 40%, while Canadian public pension funds allocate around a quarter of assets to private markets. However, the composition of those allocations differs. Australian investors have tended to place greater emphasis on infrastructure and real assets, while Canadian funds typically allocate more heavily to private equity and venture capital. The blueprint suggests future UK default funds are likely to draw on both approaches, combining infrastructure's diversification and inflation-protection characteristics with the growth potential offered by private equity and venture capital.

While maintaining global diversification, the report argues that future schemes are likely to retain a meaningful domestic bias within their private market allocations. It estimates that 30% to 50% of private market investments could be allocated to UK opportunities, compared with around 5% to 10% of listed equity investments. As private market allocations grow, this could materially increase the volume of pension capital flowing into UK infrastructure, businesses and other productive assets.

By 2035, the report estimates that between £40 billion and £200 billion of DC pension assets could be invested in UK private markets under this approach, compared with an estimated £2 billion to £3 billion invested in private markets by today’s master trusts.

Notes to editors:

1. Current DC pension investment compared to 2035 blueprint for DC default funds (percentage of total AuM by asset class)

2. Blueprint for default workplace DC pension investment during growth stage in 2035

Research information: 

Blueprint developed through WPI analysis of current UK and international allocations, market participant targets and interviews with pensions sector and investment experts, leading employee benefit consultants (EBCs) and international frontrunners.

Figures include both trust- and contract-based DC workplace pensions, with 75% of total AuM assumed to be in growth phase. Savers returns calculated using a Monte Carlo simulation, reporting percentile outcomes based on 20,000 simulations for each saver profile in Note 1. Outcomes compared to counterfactual of just 1.7% of growth phase AuM invested in private markets. Figures are net of fees and presented in real terms, using 2026 prices.

Investment in infrastructure and real assets in 2035 is estimated to range from £15-60 billion, underpinning £25-115 billion in GDP and 70,000-330,000 jobs. Private equity and VC investment estimated between £17-80 billion, supporting up to 14,000 SME equity deals and 7-32 unicorns (privately-held start-up companies valued at over $1 billion). For more information please see page 37 of the report.

About WPI Economics:

We are an economics, data insights, policy and impact consultancy, but one that is a little different to many others. We draw on backgrounds in government and the private and charitable sectors to produce work designed to make a difference. We do not do research for research’s sake. We are committed to ensuring that everything we do has an impact - which is part of the reason why we recently became a verified B Corporation.

About Standard Life:

Standard Life is a retirement specialist focused entirely on retirement saving and income.

We are proud to manage around c£317bn in assets on behalf of our 12 million customers, and we champion the belief that everyone's journey to and through retirement can be better.

With our focus entirely on retirement savings and income we want to be the business that people trust to guide their retirement journey, helping our customers achieve better outcomes and greater financial security in later life.

As a FTSE 100-listed group we are using our size, expertise and influence to shape the world our customers will retire into, and are committed to helping three million customers by 2035, take action towards a better retirement.

Standard Life is a responsible investor with a clear commitment to supporting a more sustainable future. The company has achieved its net zero goal across its emissions for 2025 and is working towards net zero investment portfolios by 2050 or sooner.

Standard Life is recognised as a leading employer, with long-standing accreditation as a Living Wage Employer, Living Pension Employer and Carer Positive Exemplary Employer and in 2025 became one of Britain’s Most Admired Companies in 2025.