More than two thirds (69 per cent) of defined contribution (DC) pension schemes are planning to access private markets through Long-Term Asset Funds (LTAF), analysis from Schroders and Longview Networks has shown.

Almost three quarters (74 per cent) of DC schemes expected to increase allocations to private markets for growth-phase strategies, while 59 per cent planned to increase exposure for retirement-phase portfolios.

Over half (53 per cent) increased their private equity allocation at their most recent investment review, with risk-adjusted returns cited as the most significant driver of private market investment decisions.

More than one in four planned to ‘significantly’ increase their UK private markets exposure, with 25-49 per cent of their total private markets allocation invested in domestic private markets solutions.

Four in 10 (40 per cent) DC schemes said they had increased their exposure to UK infrastructure at their most recent review, with 35 per cent boosting allocations to private debt.

Over eight in 10 (82 per cent) identified renewable infrastructure as the most attractive net-zero investment opportunity.

While DC schemes were increasingly looking to boost their UK exposure, there was disagreement that further scheme consolidation was needed to unlock capital for UK productive assets.

More than a third (38 per cent) felt they already had the required scale, while a further 34 per cent said barriers to investing in these assets went beyond scale.

Over two thirds (68 per cent) cited the lack of suitable opportunities as the most common barrier to investing in UK private markets.

“The DC landscape is changing rapidly, and the Pension Schemes Bill and Mansion House Accord will reshape the investment landscape,” said Schroders head of UK DC clients, Ryan Taylor.

“Our inaugural DC Investment Survey looks at these seismic shifts driving the industry and shaping DC investment.

“The biggest winner would appear to be LTAFs with nearly three in four DC schemes planning to structure their private market investments through the investment vehicle.

“At the same time, more than a quarter plan UK private market allocations significantly above those encouraged by the Mansion House Accord, suggesting growing momentum behind this investment trend.”

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