UK Council Pensions Put £32 Billion Into Shadow Lending as Nearly Half Top 10% Exposure
Updated
Updated · Reuters · May 13
UK Council Pensions Put £32 Billion Into Shadow Lending as Nearly Half Top 10% Exposure
3 articles · Updated · Reuters · May 13
More than £32 billion of England and Wales local government pension assets is now tied to private and multi-asset credit, with Reuters finding nearly half of 86 schemes had allocated at least 10% to those funds.
Average exposure reached 4.2% in private credit and 8.7% in multi-asset credit, far above official estimates showing defined-contribution workplace pensions put 3.5% into all illiquid assets in 2025.
Lambeth had almost 26% of assets in the two categories by December 2025, while Cumbria allocated 8% to private debt, underscoring how some council schemes exceed levels seen in many private funds.
Regulators and academics warned opaque valuations, hidden leverage and capital calls in downturns could create liquidity stress, forcing schemes to sell liquid assets or borrow if private markets sour further.
Consultant Hymans Robertson said there were no immediate cashflow concerns because councils can rebalance across other assets, but the Bank of England is already stress-testing private credit after wider market strains.
As regulators warn of 'shadow lending' risks, are UK public pensions unknowingly facing a major crisis?
In the opaque private credit market, what is the true value of Britain’s pension fund assets?