Defined contribution pension providers will be forced to publicly disclose how much money is invested in the UK under new plans announced by Jeremy Hunt.
The chancellor used his Budget speech today (6 March) to announce the plan.
Hunt said he will give new power to The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) to ensure better value from defined contribution pension schemes by judging performance on overall returns rather than cost.
“I will introduce new requirements for DC and local government pension funds to disclose publicly their level of international and UK equity investments,” he added.
“I will then consider what further action should be taken if we are not on a positive trajectory towards international best practice.”
Matt Tickle, Barnett Waddingham chief investment officer at professional services consultancy, comments: “Given the poor performance of the FTSE all-share compared to global equities since 2010, and combined with the chancellor’s focus on returns and value, DC pension schemes are being put into a remarkably difficult position.
“It’s a rock and a hard place; returns for members versus a political push for a cash injection into the country.
“What’s more, the UK market is heavily weighted towards oil and gas – further investment into UK equities could disrupt schemes’ existing sustainable investment strategies.
“Pension schemes will not thank Mr Hunt for his announcements today. Their responsibility must be to their members, not changing with the winds of government policy or party.
“But with other changes on the horizon and regulatory pressure coming from all angles, there are some tough months ahead.”
