Pension savers prioritise returns over ‘investment big bang’

Pension savers prioritise returns over ‘investment big bang’
Credit: Pexels/ Kristina Paukshtite

Less than a fifth of pension savers think that investing their pensions in companies or assets that would benefit their local area should be prioritised, research has revealed.

The findings from the Centre for Progressive Policy, published on July 25, jars with the government’s push to channel pension fund money into domestic infrastructure.

Last year, prime minister Boris Johnson and then-chancellor Rishi Sunak published a letter calling for an “investment big bang”, making comparisons with pension fund investment in Australia and Canada into domestic projects.

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Work is under way to make it easier for master trusts to invest in illiquid assets, while the government has also asked Local Government Pension Scheme funds to set out plans for investing up to 5 per cent of their assets in projects that support domestic initiatives — an idea that has met with opposition from some funds.

In July, the Association of British Insurers told the government that plans to reform the Solvency II framework would disincentivise infrastructure investment.

Of the 2,056 pension savers surveyed, the CPP found that 82 per cent thought investment returns should be prioritised, while 54 per cent said they thought fees should be the goal.

The government is currently consulting on the regulatory charge cap, which is designed to protect savers from high fees. Increasing the cap would make it easier for funds to invest in illiquid assets.

“A plan for economic recovery and growth should be at the heart of our next prime minister’s agenda,” said CPP director of policy and research Ben Franklin.

“While pension savings can play a role in delivering this, it must not be done at the expense of retirement incomes and by raising fees against savers’ wishes.

“It’s clear from our research that people prioritise two things: return on investment, and affordable fees. [The] government’s plans for unlocking capital for new infrastructure must be guided by these two principles.”

Alex Janiaud is deputy editor at Pensions Expert, FTAdviser's sister publication