The Association of Investment Companies has expressed disappointment with the failure of the Pension Schemes Bill to include investment companies.
The Bill will give the Government powers to compel pension schemes to invest a percentage of their portfolios in private assets. In the draft legislation, pension schemes would not be able to meet this requirement by investing in listed investment companies that hold private assets.
While the AIC does not advocate pension funds being compelled to invest in private assets, given the Government is seeking such powers, it argues that investment companies should be one of the options available.
Richard Stone, chief executive of the Association of Investment Companies, said: “It is very frustrating that the Government did not amend the Pension Schemes Bill when it passed through the House of Commons.
“For pension savers to achieve the best outcome, we need a competitive market which includes the widest choice of investments, and this includes investment companies.
“Choice ensures pension schemes can invest in the most appropriate private assets for their savers by weighing up performance, costs, liquidity and risks.”
Stone warned that excluding investment companies would be bad for competition, resulting in higher costs and a lower quality offering for pension savers.
He added: “We are urging the Government to amend the Pensions Schemes Bill as it passes through the House of Lords. Investment companies are a tried and tested way for all investors, including pension schemes, to access private assets.
“Investment companies have invested over £110 billion in private assets such as infrastructure, renewables, property, venture capital and private companies – all providing vital capital and helping support UK growth.”
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