Table of Contents
Investing savers’ money in British infrastructure and private equity risks undermining the central role of pensions, a leading mutual insurer has warned.
Barry O’Dwyer, chief executive of Royal London, said he was “nervous” about Labour’s proposal to restructure the pensions industry.
The Pension Schemes Bill aims to boost the returns for millions of pensioners by encouraging schemes to invest more money in British infrastructure and private companies.
“I’m a little nervous about someone else dictating how the money is spent,” O’Dwyer said.
“With an estimated £3 trillion in UK pensions, it is understandable that pensions are seen as having an important role to play in supporting the country’s economic growth. However, the primary function of pensions is to fund clients’ retirement.”
Risk: Pension plan bill seeks to boost profitability for millions of retirees
Royal London, which has more than 2 million pension clients, did not sign up to the previous government’s Mansion House Compact, a commitment to allocate at least 5 per cent of default pension funds to unlisted equities by 2030.
It has secured support from providers including Aviva, Legal & General and Scottish Widows, but Royal London felt it would not be in the best interests of clients.
The mutual fund, which is owned by its customers, manages around £169bn in savings.
Life insurer Phoenix Group and fund manager Schroders agreed this week to launch an investment manager to promote the pact and channel £20bn of pension cash into private markets.
DIY INVESTMENT PLATFORMS
AJ Bell
AJ Bell
Easy investment and ready-to-use portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free investment ideas and fund trading
interactive investor
interactive investor
Flat rate investing from £4.99 per month
Saxo
Saxo
Get £200 back in trading commissions
Trade 212
Trade 212
Free treatment and no commissions per account
Affiliate links: If you purchase a product This is Money may earn a commission. These offers are chosen by our editorial team as we believe they are worth highlighting. This does not affect our editorial independence.