UK pension funds need to start pumping money into London’s stock market “urgently”, the City of London minister said today, in a fresh warning to the sector as the government seeks to funnel money into the City of London. I plan to tell you.
In a speech to think tank Bright Blue, Treasury Secretary for Economic Affairs Bim Afolami said the lack of investment from pension funds into UK-listed companies was a “challenge” that needed to be resolved if the UK was to recover. expected to be stated. The charm of public markets.
The comments came after Jeremy Hunt, the Chancellor of the Exchequer, threatened pension asset managers with “further action” in the March Budget unless they increased their allocation to UK equities. This highlights the fact that
Pension cash is seen as key to reviving Britain’s stock market, which has suffered a slump in investment over the past two decades. Around 4% of London-listed stocks are now held by pension funds, down from 39% in the early 2000s.
“First of all, we have a challenge. [pension funds] Don’t invest enough in the UK. This needs to change urgently,” Afolami would warn.
The Government will also aim to accelerate efforts to consolidate the UK’s sprawling pensions market in order to increase the size of the Accumulation Fund. “[The] The market is currently too fragmented,” Afolami said.
Ministers and regulators have spent the past two years exploring ways to free up investment from retirement funds, with Mr Hunt announcing in March that domestic funds would be required to publish the geographic composition of their portfolios by 2027. Announced. Accepting new members is also blocked.
The Pensions Regulator and the Financial Conduct Authority will also be given more powers to ensure better value from so-called defined contribution schemes.
“We are introducing new requirements. [defined contribution schemes] and local authority pension funds to publish their level of investment in international and UK shares,” Mr Hunt said in March.
“If we are not on a positive trajectory towards international best practice, we will consider what further action to take.”
Labour’s shadow chancellor Rachel Reeves has previously floated the idea of forcing pension funds to allocate 5% of their assets to UK stocks.
A lack of investment on the London Stock Exchange has been blamed for the weak valuations of London-listed companies and the decline in IPOs over the past two years. With just 23 companies listed on the London Stock Exchange and raising less than $1 billion, Citi has suffered its worst listing drought since last year’s financial crisis.
But efforts to encourage pension funds to invest more in London have worried some in the pension industry, who say they should invest in the interests of their members rather than the health of the UK stock market.
