The share of pension assets managed by the UK investment management industry has fallen from a peak of 45 per cent of total assets under management (AUM) in 2018 to 27 per cent in 2024, the Investment Association (IA) has revealed.

The IA's report explained that the fall was driven by an increasing number of defined benefit (DB) schemes winding down as memberships age, alongside schemes achieving full funding and transferring their liabilities and assets to insurers.

The IA also highlighted the persisting impact of the 2022 gilt crisis on the institutional market.

This fall also meant that assets managed on behalf of retail investors overtook pension funds’ share of total AUM for the first time since, at 28 per cent in 2024, having seen sustained growth and investor interest since the onset of the pandemic in 2020.

Overall, the IA revealed that the UK investment management industry had recorded an "impressive" 10 per cent growth in AUM over the past year to reach a new peak of £10trn in 2024.

This growth was driven by strong market performance, with strong equity returns, improved economic conditions and a rising share of assets managed in the UK on behalf of overseas investors.

Indeed, UK funds under management (FUM) rose 5 per cent in 2024 to £1.49trn, reflecting stronger investor confidence and market gains, while assets managed for overseas clients surpassed 50 per cent of the total for the first time, reaching £5.1trn (51 per cent of AUM).

Commenting on the results, IA chief executive, Chris Cummings, said the record AUM reflected the industry’s resilience in the face of geopolitical and economic uncertainty.

“The industry has not only adapted to the challenges of 2022 and 2023 but has flourished, with assets under management now reaching £10trn," he noted.

“Industry growth has been supported by the UK’s status as a global centre of excellence for portfolio management, as we retain and attract an increasing number of overseas clients."

Cummings said that "significant improvements" to the regulatory environment were enabling firms to take appropriate levels of risk and foster innovation, helping UK firms to thrive and take important steps towards creating a culture of inclusive investment.

Looking ahead, he warned that maintaining regulatory and political stability would be "essential" to sustaining competitiveness and attracting long-term capital.

"The UK government’s recent efforts to boost domestic capital through the Leeds Reforms signal a powerful alignment between government, regulator and industry,” Cummings added.

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