Chancellor of the Exchequer Rachel Reeves said she didn’t rule out mandating pension funds to allocate money to UK assets, as the government seeks to channel more investment into the domestic economy.
“I’m never going to say never,” Reeves said in a Bloomberg interview on Tuesday, when asked if she was considering forcing funds to invest in British companies and infrastructure projects. “But I don’t think it’s necessary. We don’t need to mandate them if people are willing to sign a voluntary accord.”
Reeves was speaking after UK pension fund managers agreed to invest at least 5% of their assets domestically, a win for Prime Minister Keir Starmer’s Labour government as it tries to boost economic growth by funneling billions of pounds into startups and infrastructure projects.
Seventeen large pension providers have signed up to the voluntary commitment, which will see them invest at least 10% of defined-contribution default funds in private markets by the end of the decade, according to a statement on Tuesday. Within the 10% allocation, at least half will go to UK private markets, “assuming a sufficient supply of investible assets,” it said.
The Treasury is planning to legislate to give itself the power to mandate investment by pension funds, with the intention of keeping the power in reserve, hoping it won’t be necessary to use it, according to a person familiar with the matter. The mere existence of the power should be enough to encourage pension funds to comply, the person said.
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