OVER TWO THIRDS OF PENSION SCHEMES VALUE COMPLETE FREEDOM TO INVEST FOR THE BENEFIT OF MEMBERS

• Investment Freedom: Most pension funds believe it essential that they continue to be given complete freedom over investment decisions provided they invest in line with the interests of scheme members (DB – 75%, DC – 66%).
• UK Growth: Most pension funds say they would invest more in UK companies and markets if the Government introduced specific fiscal incentives for investment in UK assets (70%) and many savers think the Government should provide such incentives (67%).
• The Green Transition: But few pension funds believe the Government, so far, has adopted the right strategy to attract pension fund investment in the green transition (DB – 10%, DC - 14%).

Investment Freedom

Over the last year, some lobby groups have suggested that the Government should direct the investment choices of pension funds so that, instead of focussing primarily on the interests of scheme members, they should also be required to invest in certain asset types. Sometimes these have been calls to invest in UK growth, other times in the Green Transition, and sometimes they have been prohibitions in investing in certain countries.

Our research with pension funds suggests that they believe firmly in the importance of always ensuring the outcomes benefit scheme members. This does not prevent them from investing in the UK or taking into account ESG factors (Environmental, Social and Governance), but it does mean these investments should always work for savers as well.

So far, neither the Government nor the Opposition has proposed that politicians direct where pension funds should invest. Our research today underlines how much this view is supported by the pension fund sector.

UK Growth

Last year, the PLSA welcomed the Government’s LIFTS initiative which aims to attract investment money into promising life science investment opportunities. We have previously said we hope the Government will consider more action in this area. Our research suggests that the idea of the Government providing fiscal incentives to attract pension fund investment to the UK is very popular.

During its annual conference last October, Pension and Lifetime Savings Association set out six proposals to attract UK pension funds to invest in UK growth. The analysis showed how a series of policy, regulatory and fiscal measures could be adopted to achieve this goal.

The Green Transition

Although it is widely recognised that substantial investment is needed to help achieve net zero by 2050, and that the Government has taken some steps to facilitate the necessary green transition, most pension funds believe more action is needed. In particular, it is important that the Government adopts a UK transition plan and a green taxonomy to help pension funds make the right decisions on green investment.

All these pension fund investment issues and more will be discussed at our Pension Investment conference later this week.

Nigel Peaple, Director of Policy & Advocacy at the Pensions and Lifetime Savings Association, said; "Our latest research into pension fund investment issues reveals some interesting views from pension fund managers and savers on several of the key investment issues facing us today – investment freedom, investing in UK growth, and investing in the green transition to combat climate change. We look forward to discussing these issues in depth at our Investment Conference this week.”

Cali Sullivan, PR Manager

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