New research from leading online pension provider, PensionBee, finds most savers (70%) are worried about investing in UK illiquid assets, such as infrastructure and startups, due to potentially higher risks and costs.
Following the governments call for UK institutional investors to invest in more long-term illiquid assets, and create a post-COVID ‘Investment Big Bang’, PensionBee surveyed 250 members of the general public to understand their views. This analysis revealed a consumer preference for some (39%) or no levels of investment (36%) in UK illiquid assets. One consumer said, “I would invest in these if they gave comparatively higher returns or were safer investments.” Another respondent commented, “The value of illiquid assets is too volatile for me!”.
In addition, the majority of respondents (76%) stated that they would mind encountering delays, while their illiquid assets were converted to cash, preventing them from transferring or accessing their pension savings quickly.
Romi Savova, CEO at PensionBee, comments: “We do not believe that the UK government should play a role in deciding pension asset allocation. Our latest research indicates that a significant section of the general public also share our concerns.
The routine investment selection process should be followed in all instances, including when deciding to add illiquid assets to an investment portfolio. Illiquids, like all asset classes, will evolve over time, and we expect our asset managers to monitor cost competition and outcomes, and maintain a risk-appropriate selection process.”
Appendix
Table 1: Concerns surrounding investment in UK illiquid assets
| I’m worried about investing in a lot of UK illiquid assets due to potentially higher risks and costs | Proportion of respondents |
|---|---|
| Strongly agree | 28% |
| Agree | 42% |
| Neither agree or disagree | 24% |
| Disagree | 5% |
| Strongly disagree | 1% |
Source: PensionBee, August 2021. 250 respondents.
Table 2: Attitudes to investment in UK illiquid assets
| What do you think about the government encouraging pension funds to invest more in long-term illiquid UK assets? | Proportion of respondents |
|---|---|
| I want some of my pension to be invested in UK illiquid assets | 39% |
| I don’t want any of my pension to be invested in UK illiquid assets | 36% |
| I want a lot of my pension to be invested in UK illiquid assets | 22% |
| Other | 3% |
Source: PensionBee, August 2021. 248 respondents.
Table 3: Attitudes towards waiting for illiquid assets to to be converted into cash
| How comfortable would you be to wait a few months for your illiquid assets to be converted into cash? | Proportion of respondents |
|---|---|
| I’d be very frustrated by this | 32% |
| I would mind but not too much | 44% |
| I’d be happy to wait | 24% |
Source: PensionBee, August 2021. 250 respondents.
