James O'Brien 10am - 1pm
Jeremy Hunt moves to boost returns for pensioners with reforms to get pension funds making riskier investments
9 July 2023, 08:33
Jeremy Hunt will encourage pension funds to make bigger returns for their investors by making riskier investments in high-growth businesses in a speech later this week.
Listen to this article
The Chancellor will promise "evolutionary not revolutionary" reforms to get pension funds making billions of pounds of higher-risk bets to boost economic growth.
In a speech in the City on Monday, Mr Hunt will set out plans to encourage the funds to "unlock capital" to grow returns for their pensioner investors.
The Chancellor will welcome an agreement with leading pension firms to put 5% of their investments, a sum of up to £50 billion, into high-growth businesses. He will also announce regulatory reforms.
Aviva, Legal & General and Phoenix Group are among the big pension funds that are taking part in the agreement.
Pensions firms welcomed that Mr Hunt was not making the move mandatory, as the industry had been warning against.
In his annual Mansion House speech, the Chancellor will pledge that changes will put the needs of pension savers "first and foremost".
"It will be an evolutionary not revolutionary change to our pensions market," he is expected to say.
Mr Hunt will pledge to prioritise a "strong and diversified" gilt market, meaning he was not forcing firms to favour riskier investments over the low-risk ones offered by the Government.
He will also set out a "golden rule" of never making changes that "compromise" the sector with what he is calling the Mansion House Reforms.
Nigel Peaple, the Pensions and Lifetime Savings Association's policy director, said: "The Chancellor has confirmed today that the pensions sector will keep their freedom to invest in the interest of the individuals whose savings they manage.
"This is the key priority for the pensions sector and we welcome that Mr Hunt has listened to our views on this important matter.
"After the gilt market turmoil of last September, it is reassuring that the Government is committed to a strong and diverse gilt market and that, in consequence, it is seeking evolution not revolution with regard to pensions.
"We look forward to continuing our dialogue with the Government on their proposed pensions reforms, seeking always to achieve outcomes that mean a 'win, win, win' for savers, pension schemes and the UK."
Michael Moore, chief executive of the British Venture Capital Association, said: "We welcome the Chancellor's recognition of what we have known to be true for a long time, that British pension savers are losing out."