Why are governments, regulators and the pensions industry so keen to put Private Markets in your pension?

The 2026 Budget was a relatively timid affair. But one point stood out for investors: the government wants more pension money invested in Private Markets.

It is the latest in a series of interventions. Earlier this month, the Investment Association called for wider access to Private Markets, including through SIPPs. In May 2025, 17 of the UK’s largest workplace pension providers signed the Mansion House Accord, committing to invest at least 10% of their defined contribution default funds in Private Markets by 2030. 

The same shift is happening elsewhere. In August 2025, President Trump signed an executive order intended to broaden access to alternative assets, including Private Equity and Private Credit, within US 401(k) retirement plans.

These initiatives all point in the same direction: policymakers, regulators and pension providers are keen for long-term retirement savings to have greater exposure to Private Markets.

Whilst new for most private investors, this is a well-trodden path for large institutional pension schemes. CalPERS, the California Public Employees’ Retirement System, has had a significant allocation to Private Markets for decades, which it continues to increase (it currently stands at nearly 40% of the portfolio – September 2026). Closer to home, the Local Government Pension Scheme holds a substantial proportion of its assets across Private Equity, Infrastructure, Private Credit and Property.

Why are some of the world’s largest pension funds investing in Private Markets? Should private investors follow suit? What are the risks? What practical steps might you consider?

In this article we give a brief overview of the main facts – you should form your own opinion. Please note: Private Markets investments are only for eligible investors with the knowledge and experience to understand their structure and risks. Due to regulatory restrictions, only investors who qualify as high net worth or sophisticated can access full details of the funds mentioned.

There are three main reasons why you might consider adding Private Markets to your pension – and one key reason it could make sense to do so.

1. Capture opportunities you might miss if you invest only in public markets

Listed equities and bonds remain central to most diversified portfolios, but they do not capture the full range of investment opportunities.

In the US, 87% of companies with annual revenues above $100 million are privately owned. Meanwhile some businesses are now reaching extraordinary valuations before public-market investors get an opportunity to invest. SpaceX is an example. By the time it floated in June 2026, it had reached a valuation of $1.77 trillion.

Anthropic looks set to be another. The developer of Claude has filed for an IPO and is reportedly targeting a valuation of as much as $2 trillion. OpenAI is rumoured to be delaying its IPO plans until next year, but in the meantime is seeking to raise at least $30 billion privately at a potential $1.4 trillion valuation.

As we discussed in our recent article, waiting until a business is publicly listed to invest could mean missing out on a significant period of its growth. But staying solely in public markets also means forgoing Private Credit and Infrastructure investments, from lending directly to businesses to investing in energy, transport and data centres.

Private Markets unlock this kind of opportunities. 

3. Potential for added diversification

Private Markets could help enhance diversification because their returns tend to be less directly affected by the forces that drive public markets.

Private Equity valuations, for example, are usually more closely tied to how the performance of the underlying businesses, including revenues, profits and growth prospects, and less immediately affected by shifts in investor sentiment, as is the case for listed equities. That said, private assets are valued less frequently than listed investments, which can also make returns appear smoother.

Meanwhile, Infrastructure assets with inflation-linked revenues could offer some protection when prices rise, while the floating-rate loans common in Private Credit could generate more income as interest rates increase.

One key reason it could make sense to add Private Markets to your pension

One key reason Private Markets could be particularly well suited to pensions is that both tend to involve long time horizons, which means that they could align – though you should form your own view.

Private Market investments can take years to develop and realise their value. Pension savings, meanwhile, may be invested for decades. That long investment horizon can give Private Equity managers time to grow businesses, infrastructure projects time to develop and Private Credit investments time to run their course, without investors necessarily needing the capital in the short term.

Remember: public and private markets are different. Public market investments tend to be traded daily and can be relatively easily realised. With evergreen Private Markets funds, realisations can take several months and restrictions can apply. So, if held in a pension, assets will not be immediately available for retirement, transfer out, divorce or death (including any IHT payment). Private Markets in a pension should not be your main source of retirement income.

Until recently, it was difficult – if not impossible – for individual investors to invest in Private Markets funds. Traditional funds often required substantial commitments, capital calls and money to be locked away for a fixed term.

The growing availability of evergreen, or semi-liquid, funds is starting to change that for eligible private investors.

Nine of the world's 10 largest Private Equity managers now offer evergreen funds. Investors can therefore access many of the same managers used by large institutions, but through fund structures designed to be more accessible to private investors:

• Lower minimum investments, in some cases below £10,000.
• Regular opportunities to invest, typically monthly, rather than committing capital to a fund that draws it down over several years.
• Immediate exposure to an existing portfolio when you invest, rather than waiting for a traditional fund to deploy committed capital.
• Periodic opportunities to sell, typically quarterly. Unlike a fixed-term Private Equity fund, there is no predetermined multi-year lock-up, although redemptions are usually limited and are not guaranteed. Funds commonly cap quarterly redemptions at around 5% of NAV and may impose additional restrictions.

The result looks more like a conventional open-ended fund or unit trust, albeit with more limited liquidity.

Crucially, evergreen funds can be held within a SIPP (Self Invested Personal Pension). In practice, though, access remains limited: to our knowledge, the Wealth Club Private Markets SIPP is currently the only SIPP specifically designed to offer a range of Private Markets funds. You can invest with new pension contributions or transfer money from an existing pension or SIPP, without having to commit new money.

Holding the funds within a SIPP also brings the usual pension tax advantages. New contributions can qualify for pension tax relief of up to 45%, subject to the usual rules and allowances, while investment growth is free of capital gains tax. Tax rules can change and benefits depend on individual circumstances. 

While all investments can lose money, Private Markets investments sit at the riskier end of the spectrum. Some of the main risks are below.

Capital risk – Investors could lose some or all of their capital. Income is variable and not guaranteed. You should not invest money you cannot afford to lose, or may need in the short to medium term.

Liquidity risk – Private Markets investments are long term and not easily realisable, with no established or easy-to-access secondary market. Even when investing through an evergreen fund, redemption requests are typically restricted to specific dealing windows and may be delayed or capped during periods of high demand. Early redemption penalties or restrictions may also apply.

Market and strategy risk – Investments in Private Markets are sensitive to changes in the global economic outlook. An economic slowdown or a drop in investor confidence could have an impact on the value of the investment. Some funds use more complex strategies or borrowing (leverage), which can boost gains but also make losses bigger. Make sure you understand how these approaches could impact your investment.

Currency risk – Investments denominated in currencies other than the fund’s base currency expose it to the risk of exchange rate movements.

Valuation risk – Private assets are valued periodically using private data, rather than traded continuously using publicly available data. As a result, valuations may not fully reflect changing market conditions and may be more opaque than publicly traded investments.