Beth Brown comments on the UK investment landscape for pension schemes in Pensions Age
The new government’s agenda for the UK private pensions industry has included a focus on improving domestic investments.
Commenting in Pensions Age, partner Beth Brown discussed how trustees have a responsibility to ensure diversification of investments, so that “excessive reliance on any particular asset, issuer or group of undertaking” is avoided.
“It is in members’ interest not to put all assets in one basket because concentration in any one aspect of the market, particularly a risky part of the market, does not allow for a safety net if things go wrong.”
The chancellor’s ‘landmark review’ of the pensions industry is aimed at unlocking the £2 trillion held in pension schemes in order to boost investment in the UK economy. However, significant reforms are required to make this achievable.
She further highlighted that a suitable offering of investment that will boost the UK economy will need to be developed and marketed to trustees, adding that the government has already said that it will focus on the financial service sector’s role in delivering more investment and financing growth, including getting the industry and regulators to work in partnership to deliver growth.
“This could lead to some exciting new investment products being developed. The intention is to continue to fix the foundations of the economy, rebuild Britain and make every part of the country better off.”
However, changes of this scale inevitably bring about risks. Beth noted that the government needs to be very careful when making these changes, as the investment performance of schemes, particularly defined contribution schemes, directly impacts members’ savings for retirement.
“It is an admirable goal to want the UK economy to do well for the benefit of all, but pension funds are private property. They represent the retirement savings or deferred pay of individuals. The government must be well aware of the political risk of interfering with members’ money.”
Read Beth’s comments in the October 2024 edition of Pensions Age, here, from page 53.
The views in this article are intended for general information purposes only and should not be used as a substitute for professional advice. Arc Pensions Law and the author(s) are not responsible for any direct or indirect result arising from any reliance placed on content, including any loss, and exclude liability to the full extent. Always seek appropriate legal advice from a suitably qualified lawyer before taking, or avoiding taking, any action. If you have any questions on the points raised in the above, please do not hesitate to get in touch.