Industry experts agree that UK pension schemes could be incentivised or even required to invest much more in UK assets post-general election, Cushon has found, with the debate increasingly focused on how far the incoming government will go on this issue.

According to Cushon, the consensus during its recent webinar on the post-election pensions landscape was that UK pensions could be incentivised or even required to invest more in UK assets post-general election, with all of the political parties pushing for a government of growth.

Indeed, Cushon strategic adviser, Julius Pursaill, noted that there is broad consensus about the need to find probably very large sums of capital to drive the growth agenda, and more generally to invest in UK societal infrastructure.

And whilst it's not clear where exactly this large sum of money is going to come from, Pursaill suggested that all parties will view pension fund assets with interest, and consider what steps they might take in order to release some of those assets to flow into UK growth and societal infrastructure investments.

LangCat director of public affairs, Tom McPhail, agreed, arguing that whether it's Conservatives, Liberal Democrats or Labour, there is a consensus on the direction of travel.

"Now it is okay for governments to intervene in this space and direct what pension funds do with these assets, it is going to happen whoever wins the next election," he said.

"Really, all we're debating about is how it happens and how far down this road we go.”

One potential approach, raised by former pensions minister and Cushon advisory board member, Ros Altmann, is to mandate a minimum percentage of new pension contributions to be invested in the UK in exchange for pension tax relief.

This could be 25 per cent in domestic listed or real assets, for instance, which still leaves 75 per cent available for non-UK allocations.

According to Altmann, this could help "kick-start a virtuous circle for UK markets and growth", as well as build a stronger economy for pension scheme members to retire into.

“It’s astonishing to me that our pension funds aren’t required to invest anything at all in UK companies,” Altmann said.

“If the government were to incentivise investment in UK companies in exchange for tax relief… it is very easy to justify. It would bring a lot of money in each year if new contributions need to be invested in UK listed assets or real assets like social housing.

“If you don't want the tax relief you're free to invest wherever else outside the UK. But if taxpayers are putting money in, I think they need to know that some of that is actually going to benefit them and the economy."

This article was originally published on our sister website, Pensions Age.

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