MPs pension scheme makes ‘mockery’ of Reeves funding push
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The MPs’ pension scheme has lower than 3 per cent of its fairness portfolio invested in UK shares, far decrease than personal sector friends, prompting claims that it’s making “a mockery” of efforts by chancellor Rachel Reeves to encourage funding within the London inventory market.
The £855.5mn Parliamentary Contributory Pension Fund had solely £12.8mn allotted to UK shares on the finish of March, in contrast with £462.3mn in equities listed in different nations, in response to its newest annual report.
That compares with a mean allocation for personal sector DB funds of 12 per cent in listed equities within the UK, in response to analysis by the Pensions Coverage Institute. The MPs’ scheme accounts present solely a small shift in direction of home shares from final yr, rising from 1.4 per cent to 1.5 per cent throughout the entire portfolio.
The low allocation comes as the federal government has made pension coverage a cornerstone of its plans to spice up the financial system, together with by consolidating funds to drive extra funding in Britain.
Sir Jeremy Hunt, a former Conservative chancellor who additionally tried to channel extra pension financial savings into UK equities, mentioned the MPs’ scheme ought to lead by instance.
“If governments from each events need pension funds to take a position extra within the UK, then it fairly makes a mockery of issues if the parliamentary pension scheme does the other,” he mentioned.
Charles Corridor, head of analysis at dealer Peel Hunt, mentioned: “It’s extraordinary that our personal MPs have even decrease allocation to UK equities than the typical pension fund . . . It’s excessive time the MPs confirmed some management and backed UK firms.”
The trustees of the MPs’ scheme — who’ve final duty for asset allocation — embrace highly effective political figures in each events, together with Labour’s Dame Meg Hillier, chair of the Treasury choose committee, and Dame Harriett Baldwin, her Tory predecessor within the position.
The federal government has included a spread of measures to encourage extra pension funding in UK belongings in a invoice to develop into legislation subsequent yr, together with consolidating belongings and taking a reserve authorized energy to set asset allocation targets if a voluntary strategy fails.
Pensions minister Torsten Bell advised the Monetary Occasions on Thursday: “I’m positive all pension schemes, together with the parliamentary scheme, will wish to look arduous at investing in UK belongings.
“That’s particularly the case given this yr has seen the FTSE hit report highs and vital momentum behind listings in London, from Magnum this week to Fermi, Prince’s Group, and Shawbrook.”
In Could, the Treasury launched the Mansion Home Accord, a voluntary dedication signed by 17 of the most important pension suppliers to take a position at the least 5 per cent of their belongings in UK personal markets by 2030, supplied the belongings have been sufficiently engaging.
The Treasury mentioned: “Our pension reforms will channel extra of the nation’s financial savings into fast-growing companies and very important infrastructure throughout the UK, securing over £50bn for the UK financial system by 2030 and boosting retirees’ pension pots by almost £30,000.”
Further reporting by Ramsay Hodgson
