UK pension funds hold under 5p in every £1 of their share portfolios in UK-listed companies
Down from nearly half in 2008. Not a scandal and not obviously a mistake — the same shift happened, to varying degrees, almost everywhere. Here is what actually happened, why it might be rational, why it might be a problem, and what other countries do differently.
UK defined benefit pension schemes held 48.2% of their equity portfolios in UK-quoted shares in 2008. By 2025that had fallen to 4.9% — and because schemes have also cut their OVERALL equity holdings in favour of bonds over the same period, UK shares now make up roughly 0.7% of the whole £1,068.1bn DB pension universe. This page sets out both sides of why that happened — the case that it is a rational response to genuine UK market underperformance, and the case that it has starved UK companies of a class of investor other countries still rely on — without picking a winner.
Read this first — what else changes the meaning of the headline
- UK-quoted equities, share of DB equity holdings
- 4.9%
As at 31 March 2025 — down from 48.2% in 2008. This is a share of the EQUITY portion of scheme assets, not of all assets.
- UK equities, share of ALL DB scheme assets
- ~0.74%
Computed live from the two registry series alongside it (equities are 15.1% of all DB assets; UK-quoted shares are 4.9% of that) — about £7.9bn of the £1,068.1bn DB universe.
UK Facts calculation from PPF data
- Master trust (DC) UK investment of any kind
- 15.5%
Equities, bonds and infrastructure combined — against 84.5% overseas. A broader measure than "equities alone" and a different scheme type (DC master trusts, not DB).
- Mansion House Compact progress vs 2030 target
- £1.6bn / 5%
£1.6bn invested in unlisted equities by Compact signatories (Oct 2025) against a target of 5% of DC default funds (roughly £11bn on today's asset base) by 2030 — voluntary, and small relative to the target so far.
DB pension UK-quoted equities, share of total equity holdings
UK-quoted shares made up 48.2% of DB schemes' equity holdings in 2008. By 2025 that had fallen to 4.9% — a genuine, verified collapse, not the vaguer "50% to 4%" headline this site previously repeated without a primary source.
View data table
| Year | DB pension UK-quoted equities, share of total equity holdings |
|---|---|
| 2008 | 48.2 |
| 2011 | 38 |
| 2016 | 22.4 |
| 2017 | 20.5 |
| 2018 | 18.6 |
| 2019 | 16.6 |
| 2020 | 13.3 |
| 2021 | 11.6 |
| 2022 | 9.9 |
| 2023 | 7.6 |
| 2024 | 6.6 |
| 2025 | 4.9 |
United Kingdom · Source: Pension Protection Fund, The Purple Book 2025 · series Figure 7.7 — Equity splits, weighted average, "UK quoted" column · as of 2025
Read the axis carefully. This chart shows UK shares as a share of the EQUITY portion of DB scheme assets — not of all their assets. Schemes have also shrunk their overall equity holdings from 61.1% of all assets in 2006 to 15.1% in 2025 (the wider "de-risking" shift into bonds, covered on the funded-pensions page). Both trends compound: UK equities are a shrinking share of a shrinking share, which is why the whole-portfolio figure above (~0.7%) is so much smaller than the 4.9% headline for equities alone.
The DB-schemes chart above is the longest, most consistent series available — but it is one part of the UK pension system. New Financial, "Comparing the asset allocation of global pension systems" (September 2024) gives a comparable snapshot across scheme types, verified directly against the report rather than the bare "4%" figure widely repeated without it:
Source: New Financial, "Comparing the asset allocation of global pension systems", William Wright and James Thornhill, September 2024. Historically, UK pension funds held over half their assets in UK equities around 1999 ("25 years ago" from the report's 2024 publication date).
Of the pension systems New Financial compared, only Canada, the Netherlands and Norway allocate a LOWER share of assets to their own domestic equity market than the UK does — the UK is not a uniquely extreme outlier, though it is towards the low end.
Two genuinely evidenced arguments sit on opposite sides of this. This site takes no position on which should win — both rest on real, checkable facts, and reasonable people weigh them differently depending on whether they prioritise pension savers' returns or the health of UK capital markets.
The case for investing overseas
- Trustees have a fiduciary duty to secure the best risk-adjusted return for members — not to support any particular national economy.
- The UK's own weight in global equity indices has shrunk sharply: from 8.11% of the FTSE All-World index in December 2008 to just 3.38% by July 2025, while the US rose from 44.42% to 63.68% over the same period.
- UK equity funds have underperformed US funds in 17 of the past 20 full years and global funds in 12 of the past 20 full years.
- Global diversification reduces concentration risk — a scheme holding half its equities in one national market carries a risk a globally-spread scheme does not.
- A regulatory mandate to hold more UK assets could conflict with trustees' legal duty to members if it is not also the best available risk-adjusted return.
Source: LSEG (London Stock Exchange Group), "Putting UK equities in perspective".
The case for investing at home
- Roughly £1.9 trillion has left UK equities since 2000 — pension funds are one part of a wider pattern of domestic institutional capital leaving the UK market, which some argue has itself contributed to the market's weak performance and shrinking company base (fewer buyers can mean lower valuations and fewer new listings), separate from whatever caused funds to leave in the first place.
- UK companies — especially smaller, growth-stage firms — argue they are starved of "patient" long-term domestic capital, a factor cited (alongside others) in some companies' decisions to list or relist overseas.
- Some large overseas pension funds show big domestic and direct institutional investment CAN work at scale: Canadian public-sector pensions hold 34% in private equity/infrastructure, against a UK pension system that has historically invested far less directly in such assets.
- A stronger domestic capital market could, in principle, support UK growth, jobs and tax receipts that benefit the same pension savers indirectly — an effect this site cannot itself quantify or verify.
- The Mansion House reforms (below) are the government and industry's own current answer to this argument, however small the progress against target so far.
The "starved of capital" and "supports UK growth" mechanisms above are argued positions, not independently quantified by this site — stated as such rather than with false confidence.
Two voluntary industry agreements exist, both aimed at the "case for investing at home" side of the trade-off above. Neither is government policy in the sense of being legally binding, and both apply to DC default funds specifically, not the whole pension system.
Mansion House Compact (2023)
11 signatories (Aegon, Aon, Aviva, L&G, M&G, Mercer, NatWest Cushon, NEST, Phoenix, Scottish Widows, Smart Pension) committed to allocating at least 5% of DC default funds to unlisted equities (including venture and growth equity) by 2030. Voluntary — announced by then-Chancellor Then-Chancellor Jeremy Hunt.
Progress: £0.79bn (0.36% of £219bn default-fund assets) as of 2024, doubling to £1.6bn by October 2025 — a small fraction of the 5% target so far, on the latest figures available.
Source: ABI, Mansion House Compact Progress update, 16 October 2025.
Mansion House Accord (May 2025)
A broader, later agreement: 17 signatories committed to 10% of DC default funds in private markets broadly — property, infrastructure, private credit, private equity and venture capital by 2030, with 5% specifically ring-fenced for UK private markets. Stated ambition: mobilise around £50bn.
Builds on, rather than replaces, the Compact — signatories' existing Compact commitments count toward the Accord's broader target, and firms already signed to the Compact are not released from it by also signing the Accord.
Source: Pensions UK, Mansion House Accord.
A genuinely mixed picture, not "everyone else keeps pensions at home except Britain." Each figure below is measured on a different basis — stated plainly rather than forced onto one misleading scale.
Canada — CPP Investments (Canada Pension Plan)
12%Share of ALL CPP Investments assets (every asset class) held in Canada, not equities alone — the most directly comparable "how much stays at home" figure available for a single major fund.
Often cited as a model for "patient domestic capital" pension investing (its scale and direct infrastructure/private-market investing are real), but CPP itself invests the large majority of its assets outside Canada — the model is about HOW it invests (large, direct, long-horizon stakes), not primarily about keeping money at home.
As of 31 March 2024. Source: CPP Investments, F2024 Annual Report.
Australia — Superannuation system (whole system)
50%System-level domestic-vs-offshore asset split (~50%); domestic listed shares specifically are a narrower ~23% of all superannuation assets.
System-level domestic allocation was around 65% a decade earlier — offshore allocation has risen as the superannuation system has grown large relative to the size of the Australian market it can absorb.
As of December 2024 quarter (equity split); ASFA/APRA series generally. Source: Association of Superannuation Funds of Australia (ASFA) / APRA superannuation statistics.
Netherlands — Dutch pension funds generally (e.g. ABP)
No single domestic-equity percentage independently verified by this site for the Dutch system as a whole. New Financial's comparison (above) places the Netherlands among the small group of countries with a LOWER domestic-equity allocation than the UK, not a higher one.
As of September 2024. Source: New Financial, "Comparing the asset allocation of global pension systems".
Norway — Government Pension Fund Global (the oil fund)
0%By explicit legal mandate, the fund invests EXCLUSIVELY outside Norway — across more than 9,300 companies in around 70 countries — specifically to avoid overheating Norway's own oil-dependent economy and to diversify national wealth away from a single commodity and currency.
Norway runs a SEPARATE, much smaller domestic fund (Folketrygdfondet, the Government Pension Fund Norway, around NOK 330bn) specifically for Norwegian and Nordic investment — so the "0% at home" figure describes only the larger of the two funds, not Norwegian pension policy as a whole.
As of 2026. Source: Norges Bank Investment Management / Norwegian Ministry of Finance.
What this page cannot tell you
The trade-off above is genuinely contested and this page does not resolve it — several real limits on what the evidence can establish:
Whether more UK investment would actually deliver better member returns
How much of the UK market's underperformance is caused by pension outflows, versus the reverse
What the LGPS and other UK institutional investors do, in full
Source: Covers only four asset categories (UK listed equities, UK government bonds, UK infrastructure, UK private equity) reported voluntarily by 67 of the 87 LGPS funds in England & Wales — not a complete UK-vs-overseas split of the whole portfolio, and only the second year this table has been published. Treat as directionally useful, not a robust or comprehensive figure.
What it means
- What the data directly shows
- UK-quoted equities have fallen from 48.2% to 4.9% of DB schemes’ equity holdings since 2008, and from a similar starting point across the wider pension system per New Financial’s independent estimate.
- What can reasonably be inferred
- This is part of a much longer decline in the UK stock market's own global weight and relative performance, not a UK-pensions-specific anomaly — UK institutional capital broadly, not only pension funds, has shifted away from UK equities over the same period.
- What is disputed
- Whether this represents rational portfolio management, a market failure worth correcting, or both at once, depending on which part of the picture is weighted more heavily.
- A political judgement, not a finding
- Whether government should go beyond voluntary industry agreements (the Mansion House Compact and Accord) to a binding requirement is a live political question this site does not take a position on.
- What the evidence cannot establish
- The counterfactual return UK pension savers would have received under a mandatory domestic-allocation policy, or the counterfactual state of the UK stock market had pension capital not left it.
▸How this is calculated, and what each figure covers
- The UK-quoted-equity-share-of-equities chart is a registry economy series, sourced to Purple Book 2025 Figure 7.7, verified directly against the source PDF (not a secondary citation).
- The whole-portfolio UK-equity figure (0.74%) is computed live on this page by multiplying that series by the separate total-equities-share-of-all-assets series — never hand-typed.
- New Financial’s by-scheme-type figures are that report’s own estimates, attributed as such, not independently re-derived by this site.
- International figures use each country’s own primary source and are NOT normalised onto one comparable basis — see each entry’s own "basis" statement.
Part of the pensions vertical (overview). Related: who holds Britain’s retirement savings for the DB, DC/master trust and LGPS detail this page draws on; the SWOT page’s pension fund reform item and the revenue-opportunity page’s pension war chest for the policy-lever framing; and the State Pension for the separate, pay-as-you-go universal system this page does not cover.