In addition to the Rachel Reeves £57Bn black hole that NIESR and IMF have predicted we’ve previously reported on, and the possible £24.9Bn additional cost of her failure to reduce the net financial debt as a percentage of GDP per capita, Nigel Green, Chief Executive of deVere Group, is warning about her disasterous UK Pension fund requirement.
Green said: “This is a dangerous and misguided policy for retirees. The purpose of a pension fund is to grow wealth for savers over the long term……her order to pension funds to invest part of their multi-billion pound assets in Britain are “dangerous and misguided, …….the voluntary code seeing the UK’s largest retirement funds pile 10% of savers’ money into unlisted assets by 2030 will be disasterous for pension savers. …….Investing means you look at where the most compelling returns are likely to be found and you can’t invest according to Government diktats designed to patch over domestic political pressures…it is madness, it will distort asset allocation, reduce diversification and expose millions of future retirees to lower performance”
Pension trustees have a legal duty to act in members’ best interests and that means prioritising diversification and performance over political agendas, so it would be illegal for pension advisers to meet Rachel Reeves requirements and Green warns that “Mandating a UK allocation could lead to suboptimal outcomes if attractive opportunities aren’t available at the required scale. Encouraging investment is one thing – enforcing it in a particular sector is quite another.”
The commitment from pension funds would see about £100billion of UK pension savings poured into unlisted assets by the end of the decade. Of that, £50bn would be invested in Britain. The cost to Britain of this policy could be up to £15Bn.