A group of prominent British executives, including representatives from HSBC, the London Stock Exchange, and other major companies, have written to UK Chancellor Jeremy Hunt, urging him to implement pension reforms that could enhance economic growth and returns within the country. The signatories of the letter, which also includes executives from Abrdn, M&G, GSK, Schroders, BP, and J Sainsbury, emphasized the importance of addressing the persistent underinvestment in domestic businesses despite their strength and potential.
Over the past 25 years, pension investment in UK equity markets has significantly declined from 53% to just 6% of total assets. This represents a withdrawal of approximately £1.9 trillion ($2.4 trillion), with a significant portion of these funds now being invested internationally. The executives argue that this trend needs to be reversed in order to support the growth and prosperity of the UK economy.
To achieve this, the executives proposed several reforms. One suggestion is to set a competitiveness goal for the Financial Reporting Council (FRC), requiring governance regimes to consider the attractiveness of the UK’s equity markets to investors. They believe that similar changes made to the Financial Conduct Authority and Prudential Regulation Authority have been successful and should be mirrored by the FRC. It is hoped that these reforms will be included in Chancellor Hunt’s autumn statement, which is scheduled for November 22.
Furthermore, the business leaders called for further consolidation in defined contribution pension plans, aiming to ensure that all plan members benefit from diverse investment portfolios that include UK equities. However, the Treasury has not yet publicly responded to these proposals.
The executives’ call to action highlights a critical issue in the UK economy: the need to redirect substantial investments back into domestic businesses to support growth and prosperity. With the anticipation of the Chancellor’s upcoming statement, there is hope within the business community that these proposals will be considered and that policy shifts will be made to shape the future of UK investments.
More detail via Investing.com India here… ( Image via Investing.com India )