Rachel Reeves’s bid to channel billions of pounds in pension savings into the UK economy has been snubbed by some of the country’s biggest banks and pension providers.
Santander, Scottish Widows, Fidelity and Hargreaves Lansdown have all declined to back the Mansion House Accord – the Chancellor’s plan to boost growth by encouraging schemes to invest more in UK assets.
HSBC, Virgin Money and Nationwide also appear not to have signed, and either declined to comment or failed to respond when asked about their allocations.
The blow comes after a politically fraught moment for the Chancellor, whose emotional appearance in Parliament on Wednesday prompted a market wobble that saw gilt yields spike and the pound fall sharply against the dollar and euro.
Traders speculated that Reeves, under pressure to maintain Labour’s strict fiscal discipline, could be on the brink of resignation.
But Prime Minister Sir Keir Starmer moved quickly to quash those rumours, saying her tears were unrelated to political tensions and affirming that “she will be Chancellor for a very long time to come”.
The Mansion House Accord, originally launched under Jeremy Hunt and now central to Reeves’s economic agenda, aims to drive pension capital into British companies, infrastructure and growth assets.
Signatories to the accord pledge to invest 10 per cent of their workplace portfolios in assets that boost the economy such as infrastructure, property and private equity by 2030.
At least 5 per cent of these portfolios will be ringfenced for the UK, expected to release £25bn directly into the UK economy by 2030.
Seventeen providers have so far signed up, including big names like Aviva, NatWest Cushon and Royal London, but the absence of key names from the financial services industry has cast a shadow over the initiative’s potential to deliver the scale of domestic investment ministers are hoping for.
Santander confirmed this week that it would not be making any changes to its pension fund allocations and has no plans to increase expose to UK assets under the accord.
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That stance puts it directly at odds with Reeves’s plan to unlock billions in “productive finance” to power a high-growth economy and create more opportunities for British businesses to scale.
Meanwhile, Fidelity International defended its decision not to sign, saying its UK equity allocation within its flagship FutureWise default pension fund already reflects the UK’s relative market size, and stressing that schemes must retain the freedom to act solely in savers’ best interests.
James Monk, investment director of workplace investing at Fidelity, said: “We continue to believe that pension schemes must be allowed to direct pension assets in members’ best interests, without a mandatory requirement to invest in specific markets or assets.”
He added that while Fidelity does support private markets investment through vehicles like its new diversified private long-term asset fund, the idea of Government reversing powers to direct pension allocations “risks not maintaining a primary focus on pension members’ outcomes”.
Lloyds Banking Group dealt perhaps the most damaging blow to Reeves’s strategy as its pensions arm, Scottish Widows, is planning a sharp cut to its UK equity exposure, reducing domestic holdings in its default pension fund from 12 per cent to just 3 per cent by early 2026, and even lower in more conservative portfolios.
The provider confirmed it would be redirecting assets into faster-growing overseas markets such as the US and made clear that it does not intend to sign the accord.
The decision from the UK’s biggest bank sends a signal that global diversification is still being prioritised by pension managers over Government efforts to re-anchor capital within the domestic economy.
Hargreaves Lansdown said it is in “ongoing conversation” with the Government over its pensions offering and has not ruled out supporting the accord in the future.
A spokesperson said: “We are currently focusing our discussions on the pensions investment review and how to ensure competition and innovation whilst achieving scale, with client outcomes at the heart of any decisions.
“Once we have determined our response to the pensions investment review, we will review the implications of the Mansion House Accord on our investment approach.”
Reeves has insisted the accord is voluntary but has also left the door open to future intervention if the industry does not move fast enough.
Treasury officials have made clear that while they prefer co-operation, the Government is prepared to introduce powers to compel pension schemes to direct more investment to UK assets if necessary.
The Chancellor said: “Through our Plan for Change, we are choosing to back British businesses and British workers.
She said the commitment from pension funds would unlock “billions for major infrastructure and clean energy.”
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