PensionBee comments ahead of Chancellor Rachel Reeves’ first Mansion House speech where she is expected to put pension scheme reform under the spotlight.
Lisa Picardo, Chief Business Officer UK of PensionBee, commented: “Labour has pledged to increase pension funds’ investment in UK productive finance, potentially in UK-listed shares or private areas such as infrastructure, the idea being that if these assets generate healthy returns this may benefit pension savers and provide a boost to the economy of longer-term capital.
This idea has been floated before and whilst it may be well-intentioned, there are serious concerns that it could lead to poorer retirement outcomes for savers. Plenty of question marks remain over such direction, including whether this approach would be one of disclosure and encouragement or mandatory, and which specific assets UK pension wealth would be channelled towards.
Infrastructure and other private market assets are often too illiquid and not well-enough understood. As a next step, government policy and initiatives need to be directed towards developing a market in these asset classes with greater structural liquidity and more transparency.
Similarly, Government policy, incentives and initiatives should be directed towards boosting the health, size and liquidity of the UK capital markets. An environment that fosters healthier returns is the most powerful way to attract inflows (including savers’ pensions) over the longer-term, rather than adopting a mandatory approach that forces people’s retirement savings inflows into UK-listed equities.”
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