Dame Amanda Blanc, chief executive of Aviva, has issued a firm warning against potential government moves to force UK pension schemes to invest in domestic assets, arguing the strategy would be akin to using “a sledgehammer to crack a nut”.
Blanc stressed that pension investments must be made in the best interests of savers, and coercing schemes to invest in UK-specific projects could ultimately do more harm than good.
The warning comes amid increasing tension between Westminster and pension providers over the future direction of the Mansion House Accord—a voluntary commitment spearheaded by the Treasury and signed this week by some of the UK’s largest pension providers, including Aviva, Legal & General, Aegon and Phoenix Group.
Under the terms of the agreement, these providers pledged to invest at least 10% of their default defined contribution pension funds into private markets by 2030. Approximately £25 billion of this is expected to be channelled specifically into UK assets, such as infrastructure projects, innovative start-up companies, and other private enterprises important to the country’s long-term growth strategy.
While the Treasury anticipates this pledge could unlock up to £50 billion in domestic investment, ministers are weighing the prospect of including legislative powers in the upcoming review that would permit the government to mandate this kind of allocation—particularly if providers fail to meet the voluntary targets.
Speaking at Aviva’s Q1 trading update on Thursday, Blanc rejected the premise of enforced investment, cautioning that such a move could undermine trust in the pensions system and contradict fiduciary responsibilities owed to individual savers.
“Mandation, we do not believe, is the right thing,” she said. “The government needs to consider the unintended consequences. There is a whole chain of people—employee benefit consultants, employees, workers—who need to change behaviour, not just pension funds. It’s like a sledgehammer to crack a nut. You have to be able to get everybody on board to do the right thing.”
Her comments echo a broader pushback from within the pensions sector. Although Chancellor Rachel Reeves has stated publicly that she does not currently see compulsory investment requirements as necessary, she has stopped short of ruling them out. “I’m never going to say never, but I don’t think it’s necessary,” Reeves said earlier this week.
That ambiguity has triggered unease among several key signatories to the accord, including Royal London, Aon and Mercer. They argue it would be inappropriate and potentially damaging to remove discretionary control from trustees and investment managers, who are legally bound to act in the best interests of their pension members.
Notably, the commitments made through the Mansion House Accord are conditional. Providers have underscored that their voluntary targets are subject to fiduciary due diligence and also rely on policymakers and financial regulators creating the right environment—for example, by cutting red tape and improving transparency in pricing of private market investments.
At the core of the debate is a broader governmental ambition to mobilise long-term domestic capital in support of UK economic growth and innovation. In July 2023, then-Chancellor Jeremy Hunt outlined the groundwork for the Mansion House reforms, arguing that unlocking billions from Britain’s nearly £3 trillion pensions sector could help transform the nation’s productivity and infrastructure. This is seen as part of a wider trend across advanced economies to leverage pension funds for national development, but many industry insiders warn the UK risks undermining the strength of its fund management sector if it pursues overly prescriptive strategies.
The industry’s resistance also reflects legal constraints. Under UK trust law, trustees are bound by fiduciary duty to act in the best financial interests of beneficiaries. Mandated investment could potentially breach this principle, exposing schemes to legal and reputational risk.
Dame Amanda Blanc’s remarks came as Aviva posted a strong set of first-quarter results. General insurance premiums for the quarter rose 9% year-on-year to £2.9 billion, underlining resilience in core business lines. The firm is also in the midst of a £3.7 billion takeover of rival Direct Line Group, which will significantly expand its footprint in the motor insurance market. The Competition and Markets Authority (CMA) has opened a preliminary investigation into the proposed deal, but Blanc noted this was “entirely expected” and said the regulatory review would not derail the transaction’s expected completion by mid-year.
As the Treasury readies its long-awaited pensions investment review, likely to be published later this year, Blanc’s comments and the wider industry response could shape how far the government is willing to go in its bid to drive pension cash into UK growth sectors.
For further background on the Mansion House reforms and their implications, see the Financial Times’ coverage here, and the Pensions and Lifetime Savings Association’s take on fiduciary duties here.
Read more: Aviva warns against forcing UK pension funds to buy domestic assets.
