More than half (55 per cent) of defined contribution (DC) savers are comfortable allocating part of their savings to illiquid assets such as infrastructure, private markets and other long-term investments offering diversification or higher return potential, according to YouGov research commissioned by AllianceBernstein.

The survey revealed that savers are increasingly open to investing in illiquid assets and taking a more active interest in how their pension pots are allocated, although returns remained their central consideration.

Indeed, although savers showed a clear appetite for illiquid exposure, the research also reinforced that they are willing to support broader economic or environmental goals only when there is no meaningful compromise on returns.

Nearly half (46 per cent) of respondents felt it was important for pension assets to be invested in UK companies and infrastructure, while 41 per cent disagreed.

But once the prospect of lower returns was introduced, support weakened considerably: just 34 per cent said they would accept even slightly lower performance to benefit the UK economy, while the most common response (36 per cent) was that returns should take priority above all else.

Among those open to UK-focused investing, real-economy assets resonated most strongly.

Renewable energy ranked highest (52 per cent), followed by public infrastructure such as transport and utilities (43 per cent).

Appetite was more muted for affordable housing (33 per cent) and mature UK companies (32 per cent), and only one in five savers (20 per cent) viewed UK start-ups as an appealing destination for pension savings.

A similar pattern emerged around responsible investment.

While 64 per cent said they wanted their pension invested responsibly, only 22 per cent were prepared to accept lower returns to achieve this, suggesting a desire for sustainability without sacrificing financial outcomes.

AllianceBernstein’s portfolio manager for multi-asset solutions in EMEA, David Hutchins, said the results showed that savers do value exposure to “real” assets that feel relevant to their everyday lives, but that overriding expectations around performance remain firmly intact.

He warned that to meet these expectations, default strategies will need to use the full investment toolkit, including both liquid and illiquid assets, while still keeping net returns at the forefront.

The findings also pointed to rising member engagement.

More than four in ten savers (44 per cent) now check their pension performance at least every six months - up from 33 per cent in 2023 and 23 per cent in 2020 - and 79 per cent said they are interested in tracking their pot’s growth against that of other providers.

Hutchins noted that this increased awareness was encouraging but cautioned that many savers remain ill-equipped to manage the range of risks they will face on the path to, and through, retirement.

He emphasised that professionally managed and independently overseen defaults will continue to play a central role in delivering good outcomes.

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