What is ‘clearly missing’ from Rachel Reeves’ pension review
A senior figure at investment bank Peel Hunt has set out what is “clearly missing” from Chancellor Rachel Reeves’ plans for reforming the UK pension industry.
The government has provided more details on its proposals which include the creation of £25bn ‘megafunds’ to encourage fresh investment into UK infrastructure and businesses.
The Treasury has also said it would “take a reserve power” in the upcoming Pension Schemes Bill “to set binding asset allocation targets”.
It added that the move was designed to “provide additional certainty that individual schemes will not lose business by investing in private markets, which offer the potential for higher returns but are expensive to invest in upfront”.
Rachel Reeves said the reforms would “mean better returns for workers and billions more invested in clean energy and high-growth businesses”.
However, Charles Hall, head of research at Peel Hunt, has pointed to what is “clearly missing” from the review – an “emphasis on the importance of listed markets and the importance of having pensions invest locally”.
He added that the UK is “an outlier in this” and “you only have to look at Australia to see very clearly the benefits to all citizens of investing at home”.
Pension reforms were ‘long-awaited’
Hall said: “The government has issued its long-awaited Pension Investment Review. Much of the contents were already in the public domain (such as consolidation of funds).
“However there are some key points to highlight, such as the shift from a cost focus to value for money to ensure that the focus is firmly on returns.
“The government has also recognised the importance of home investing and is expecting asset allocation to be provided by major DC funds in early 2026 – shining a light on this area will identify clearly how pension funds invest mostly in US companies and the miniscule investment in the UK.
“This has to change given the importance to the UK economy, to UK savers and to reflect the tax benefits provided.
“The bit that is clearly missing from this review is a clear emphasis on the importance of listed markets and the importance of having pensions invest locally.
“The UK is an outlier in this and you only have to look at Australia to see very clearly the benefits to all citizens of investing at home.”