Let us know about free updates
Torsten Bell’s pension minister has publicly challenged the industry’s general view that councillors increasing investment in the UK economy are putting the results of their members at risk.
The trustee has a fiduciary duty to invest primarily in the best interests of its members, which maximizes revenue. This has brought together many schemes to invest more in overseas markets that are gaining revenue. However, Bell said that investments in the UK and optimization of results are deeply compatible and claims a broader economic benefit of domestic spending.
“We’ve heard a lot about the tensions between the profits of the economy as well as the profits of pension savers. These tensions can exist in some cases, but they’re often overdone,” he said. “A better economy supported by better investments. … For the benefit of everyone.”
The UK “cannot continue to be the lowest investor in the G7,” he said, adding that growth is “very relevant” to the value of pension savings in UK investments. He also said higher wages would help pensioners still work.
Keir Starmer’s government ir is trying to fire the UK’s struggling economy and argues that pension funds should spend more in the UK to support growth.
However, pension trustees oppose the claim that the impact on the broader UK economy should be considered when making investment decisions on behalf of their members.
“As a trustee, we are always looking for products that offer higher long-term returns to our members. If the UK economy can offer such products, we will invest in it for our members.”
Elaine McGregor, legal director at the law firm Pincent Mason, said fiduciary duties mean that UK investments are made to spread risk, not “to meet the political agenda.”
She added: “Reforms proposed by the government, which are deemed to be diluted in fiduciary duties at the expense of revenue or mandated investment decisions, are likely to be strongly resisted by pension funds.”
Ministers are the cornerstone of the government’s plans to reform the UK’s pension industry and boost the UK’s economy.
The government plans to drive more pension investments in the UK through “ambitious planning reforms” by integrating schemes and improving assets that can be invested in, Bell said.
According to Think-Tank New Financial, the UK pension scheme is one of the lowest percentages of funds held in domestic equities and private assets in large global pension markets, with just 4% of assets held in domestic equities compared to the global average of 10%.
The UK Retirement Savings Fund is also below its weight in the private market, and is allocated to UK stocks where the defined inconsistency scheme is only allocated 2%.
Last November, the government announced it would create a series of “megafunds” of assets of at least £25 billion over £130 million in defined contributions and local government pension funds.
Recommended
Bell said on Wednesday that the larger scheme “may be better investing in more productive asset classes.” And that’s precisely because they can take a wider range of risks and build a more sophisticated investment capacity.”
He added that scale also helps reduce costs, improve the bargaining power of the investment process, and also helps to change the nature of ownership.
“Active and enthusiastic owners are what this economy needs more.. The scale isn’t inevitable, but it’s very likely and I put a lot of weight on it,” he said.
“The biggest source of UK domestic capital is a problem in terms of return to savings, but it also provides financial plumbing for economy and capitalism. I think we’ve forgotten it too often in the last few decades, but we haven’t forgotten it today,” Bell added.
