Pensions might not feature at the top of the political parties’ manifesto promises this election, but their role in driving the UK’s growth ambitions is increasingly on investors’ agendas.
Ahead of this week’s election, market participants are calling on the future government to ensure pension assets are effectively directed to support the nation’s infrastructure.
Julius Pursaill, a strategic adviser at fintech Cushon, says:“There’s broad consensus about the need to find probably very large sums of capital to drive the growth agenda, and more generally to invest in UK societal infrastructure. And it’s not clear where exactly this large sum of money is going to come from.”
He adds: “As a consequence, all parties will view pension fund assets with interest and consider what steps they might take in order to release some of those assets to flow into UK growth and societal infrastructure investments.”
Where previously interference from state in the investment strategies of UK pensions funds was considered taboo, Tom McPhail, the lang cat director of public affairs, says all parties are willing to direct schemes towards assets that support UK growth.
“Now it is okay for governments to intervene in this space and direct what pension funds do with these assets; it is going to happen whoever wins the next election. Really, all we’re debating about is how it happens and how far down this road we go.”
McPhail adds that far from running contrary to fiduciary duty, encouraging UK pension funds to invest in the UK is line with their goals to deliver outperformance to members.
He commented: “I think there are arguments to suggest that investment in UK PLC is actually arguably attractive from a fiduciary perspective. We think there’s additional value being left on the table, which is easier to extract from UK assets.
There are similar views from high-net-worth investors (HNWIs) who believe the UK’s political landscape is not supportive of homegrown wealth.
A survey of surveyed 744 clients about their views on wealth creation, current taxes and the attractiveness of the UK, from Wealth Club finds more than half (55 per cent) of HNWs felt that the UK is not supportive of wealth creation/creators. More than two-fifths (42 per cent) say the UK was not an attractive place to set up a business; and just under a third (31 per cent) of respondents say they are more inclined to leave the UK for financial reasons, compared to 12 months ago.
Nicholas Hyett, investment manager at Wealth Club, says: “The UK has an image problem. Wealthy investors think the country is an unappealing place to start a business, with a culture that’s unsupportive of wealth creators and high levels of taxation. Changing this group’s perception of the UK should be a key goal for any incoming government. Millionaires are already leaving the UK in droves – costing the exchequer tax revenues and draining the economy of the entrepreneurs and investors who start and support young businesses.”
