UK business group calls for pension funds to back domestic companies

Traders Union
All News
Financial News
Pension funds for UK growth

Highlights

Andy Haldane at the British Chambers of Commerce urges UK occupational pension schemes to adopt domestic equities as the default instead of global indices dominated by U.S. firms.
Haldane questions the efficacy of £60 billion annual tax relief for pensions invested overseas, arguing it yields weak returns for the UK government.
Finance minister Rachel Reeves continues to advocate for pension fund investment in long-term domestic infrastructure, reflecting broader policy momentum toward funding UK-based projects.

Pension allocation proposal gains attention

As reported by Reuters, Haldane told the British Chambers of Commerce annual conference in London on Thursday that British occupational pension schemes should by default be invested in British equities rather than in global stock indices, which are commonly dominated by U.S. companies.

Haldane argues that British startups often struggle to secure the capital needed to expand in the same way as U.S. technology companies. He says that when such businesses do attract funding, they are sometimes bought by foreign companies, which weakens Britain's longer-term growth prospects and risks the loss of jobs and innovative capacity.

He says the UK should remain open to foreign direct investment, but warns against what he describes as overseas stripping of innovative businesses. He also says the aim is not to restrict savers' choices, but to correct what he sees as an imbalance in how a large pool of pension money is allocated.

Tax relief debate and sector implications

Haldane also questions the value of the 60 billion pounds a year in tax relief on pensions and other savings when that money is ultimately invested in overseas companies or foreign government bonds. He describes that support as generating a weak return for the UK government under the current pattern of international allocation.

Britain stands out for the extent to which savers invest internationally, a practice that helps diversify country-specific risk and gives exposure to a broader range of industries. Critics of mandatory domestic investment say forcing pension funds to keep more money at home could reduce returns for savers and increase concentration risk, while doing little to solve the deeper reasons British companies struggle to attract capital.

Finance minister Rachel Reeves has already pushed pension funds to support long-term infrastructure projects, underscoring wider government interest in using retirement savings to finance domestic investment. The discussion also comes amid political uncertainty, with Haldane more recently reported to have advised former Greater Manchester Mayor Andy Burnham, who is expected to succeed Keir Starmer as Britain's prime minister next month.

In our earlier article on the tenth anniversary of the Brexit referendum, we examined how the economic verdict has shifted toward long-term effects on UK growth rather than the short-term recession warnings that did not materialise. We noted that higher trade barriers, weaker investment and lower real incomes have left the UK economy materially smaller than it would likely have been inside the EU, keeping the focus on how to restore dynamism and capital formation.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.