Reports that the Government could funnel pension money into infrastructure projects and start-up firms has been hailed “complete madness” by Nigel Green, CEO of deVere Group.
The warning follows reports in the Mail on Sunday that Chancellor Rishi Sunak has held private talks to use private pensions to help fund economic recovery projects.
First mooted in November, the Long Term Asset Fund will channel money into building projects, property and private companies. It has been suggested that workplace pension funds could invest a portion of employees’ savings in the new fund through a ‘default’ investment option.
However, Green called the suggestion “another potential grab on hard-earned retirement savings,” noting that despite the option to opt-out, the majority of workers would contribute as a result of enrolling in the default scheme.
Green said: “How the government can suggest this is a suitable investment as a ‘default’ fund for all workplace pensions is a mystery to me. By its nature, the LTAF will presumably be investing in less liquid and more risky assets.
“Most pension members simply trust the default fund to be the best option into which they should invest. In effect, they are suggesting that the LTAF should be a core holding for the least sophisticated pension investor in the UK. This is complete madness in my view.”
Green said that rather than using workplace pensions, the Government should focus on support and expansion policies to secure economic growth.
Green added: “These potential and controversial plans by the Treasury underscore ministers’ seeming willingness to delve into people’s pension pots every which way.”
