Aviva launches new default pension option shifting 25% to private markets

Aviva, one of Britain’s leading pension providers, is set to transform the investment landscape for workplace pension savers by introducing a new default option that will see a significant 25 per cent of pension pots allocated to private equity, infrastructure, property and private credit. This move marks a substantial increase from the current 10 per cent allocation under its “My Future Focus” default, and towers over the nil allocation in the provider’s low-cost “My Future” plan.

The investment solution, entitled “My Future Vision,” will be initially rolled out to the £30 billion of trust-based schemes managed by Aviva, covering 800,000 savers in its auto-enrolment master trust. The company’s director of investments, Mai Rajah, expressed hopes that, when regulatory conditions allow, contract-based schemes could eventually benefit from the same enhanced investment mix.

Clients will retain the ability to opt out, yet experience suggests defaults strongly steer member choices. The shift aligns with the Mansion House accord, where major fund managers pledged to direct at least five per cent of pots into UK private assets—a move intended to bolster home-grown investment and support British businesses.

Under the new allocation, about 35 per cent of the private market portion will go to private equity, 25 per cent each to private credit and infrastructure, and the remaining 15 per cent to real estate. Aviva has entrusted highly regarded US groups such as KKR, Apollo, Neuberger Berman, Stepstone and Invesco to oversee these investments, alongside mandates for its own in-house Aviva Investors team.

Aviva’s shift follows broader industry trends. Large groups including Legal & General and Fidelity are increasing defined contribution pension exposure to unlisted assets, citing prospects of higher risk-adjusted returns and greater diversification as drivers. Historical results show private asset classes have significantly outperformed traditional listed shares and bonds, though concerns around reduced liquidity and larger management fees remain.

This rebalancing does not come without detractors. Experts urge caution, pointing out that the impressive historical performance of private assets may not easily repeat, and highlighting increased risk and opacity, particularly within burgeoning sectors such as private credit. The debate is also political—while the government touts the change as beneficial for savers and British industry, some question whether younger generations should face greater risk while public sector pensions remain fully guaranteed.

As the new “My Future Vision” default is phased in, younger savers will see the full 25 per cent allocation to private markets, tapering to 20 per cent as they approach retirement. For now, contract-based schemes are largely excluded due to the existing 0.75 per cent pension charges cap, preventing similar shifts until rules are amended.

The latest change underlines how strategic asset allocation, rather than simple stock picking, will continue to play a central role in determining pension outcomes for Britain’s workforce as they plan for retirement in an increasingly complex financial world.