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\t\tGovernor Andrew Bailey said he was not in favour of forcing pension funds to invest in UK assets\t<\/p>\n
Andrew Bailey has warned the government against forcing pension funds to invest in UK assets, saying that while reform to the sector was essential, he would prefer to see it done in a \u201cnatural\u201d way.<\/p>\n
Treasury ministers have refused to rule out<\/a> taking measures to make British pension funds allocate a certain share of their vast portfolios to domestic assets, after the sector\u2019s investment in Britain was found to have fallen to record lows.<\/p>\n The heightened political pressure led 16 of the UK\u2019s largest pension investors to sign a voluntary accord in May in which they vowed to allocate at least five per cent of their portfolios into private markets.<\/p>\n But the government has left the door open to mandating megafunds like Aviva and Phoenix Group to back UK investment classes more explicitly, and recently gave itself the power to force funds to invest in domestic assets in its recent Pension Schemes Bill.<\/p>\n The highly contentious move has drawn a fierce response from the industry<\/a>. Aviva boss Amanda Blanc compared the move to using \u201ca sledgehammer to crack a nut<\/a>\u201c, and earlier this week Lloyds Bank chief Charlie Nunn equated it to the kind of approach used in communist China<\/a>.<\/p>\n Bank of England governor Bailey echoed those concerns, telling reporters that even though it was \u201cvery important\u201d for pension funds to invest in the UK economy, he would not support the government using legislation to force them to do so.<\/p>\n \u201cI do think that addressing the pension fund question is very important in terms of investment\u2026 and we\u2019ve had a low level of pension fund investment in the real economy in this country,\u201d he said. \u201cI think structural changes to the pension fund industry are helpful in this respect, particularly in terms of consolidation.\u201d<\/p>\n \u201cHowever\u2026 I do not support mandating,\u201d he added. \u201cI don\u2019t think that\u2019s appropriate.\u201d<\/p>\n Economic uncertainty harming listings<\/p>\n