The UK Sustainable Investment and Finance Association has made a series of recommendations to help drive long-term, sustainable growth across the country and support a more secure future for pension savers.
In its report, ‘Unlocking UK pension capital for sustainable growth: Recommendations from UKSIF’s pensions review’, UKSIF highlights gaps in the current policy and regulatory framework for UK pension schemes and urges the Government to consider its reforms as part of its ongoing Pensions Investment Review.
It says the UK’s pension sector, representing over £3 trillion in assets, has considerable untapped potential ready to drive sustainable long-term growth, with strong investor willingness to make long-term investments in infrastructure and clean energy projects. However, it said there remains investment barriers which would not be addressed should ‘mandation’ to UK-based assets be adopted by policymakers. Mandation also risks reducing investment returns for some pension scheme members and encouraging ‘asset bubbles’, the organisation said.
UKSIF has also called for greater action to address pension adequacy, with 40% of private-sector workers at risk of not achieving a minimum retirement living standard. Women are particularly disadvantaged, with the average woman projected to receive £12,000 annually in retirement, compared to £19,000 for men.
In addition, UKSIF has recommended gradually increasing auto-enrolment default contribution levels to at least 12% through incremental annual increases, which it believes could help address retirement income shortfalls while creating larger pools of capital for sustainable investments and other areas of productive finance.
Finally, the report calls for an industry-led taskforce to help streamline sustainability reporting for pension funds, reducing complexity and focussing on forward-looking, decision-useful disclosures that link directly to real-world sustainability outcomes.
Main image: nick-hillier-aQcE3gDSSTY-unsplash
