Evolutionary Not Revolutionary Pension Changes

In his Mansion House speech last night, Chancellor Jeremy Hunt outlined plans for £75bn of pension money to be released to from defined contribution and defined benefit schemes by widening the permitted investment rules with large pension providers committing to invest 5% of pension portfolios in our most promising development and technology companies, driving growth in the UK.

The Chancellor estimates that this will boost pension savings for consumers by up to £1,000 per year in better returns and increase the average pension fund by £16,000 during its lifetime.

There are many defensive EU laws for retirement schemes that are hindering growth as pension providers comply with EU adopted laws after Brexit but now the Chancellor suggests it is time to repeal restrictive investment laws and allow people to benefit from returns in fast growing UK companies.

Comment

The Chancellor called this:  “Evolutionary, rather than revolutionary change” for pensions and we must agree.  We have long thought that there are so many wasted investment and growth opportunities as investment managers have restrictions on what they can invest in on behalf of clients with eth slant being a balance of mainstream equity holdings as well as being defensive with the bond/gilt market.  Bonds/Gilts are loans to government which act as an ideal source of funding for government projects and infrastructure as well as a secure investment, and we see this move as providing a great source of finance for growing businesses as well as getting real growth returns for investors.

The Chancellor has set 3 golden rules for the UK economy to strengthen the UK's position as a leading financial centre:

• Getting the best pension member/investor outcomes.
• A "strong and diversified gilt market".
• Delivering "evolutionary, rather than revolutionary change" in pensions.