Copyright dailymail
More than 260 business chiefs have written to the Chancellor to demand that UK default pension funds are forced to invest more in Britain. Bosses at companies including Barclays, GSK and JD Sports have signed a letter calling on Rachel Reeves to ensure more retirement cash supports domestic firms. The letter argues default defined contribution funds – those which pension money automatically goes into – should be obliged to put a minimum 25 per cent of assets into UK investments. The proposal falls short of ‘mandation’ of where all funds should go, as savers could opt out without losing entitlements. The letter argues this pension fund capital is the ‘vital fuel’ that businesses need to grow. ‘However, too little of that capital is invested in the UK, while growing global competition is making it increasingly necessary to do so,’ it adds. The intervention, signed by 267 figures from major publicly-listed FTSE 100 firms as well as private companies, was drawn up by the London Stock Exchange Group and marks a step up in a City campaign to boost corporate Britain. Among the signatories are Barclays chairman Nigel Higgins, GSK chairman Sir Jonathan Symonds and JD Sports chairman Andrew Higginson. Other well-known backers include Lord Stuart Rose, the former Marks and Spencer and Asda boss, Sir Martin Sorrell, who leads S4 Capital, and Rupert Soames, the Smith & Nephew and Confederation of British Industry chairman. Their involvement adds weight to a plan previously drawn up by a City taskforce. The decline in pension fund investment in the UK is cited as a key factor in the London stock market’s fading fortunes. Deeper pools of capital available in the US have attracted British firms to list in New York. And the lower valuations of many UK firms have made them tempting takeover targets for foreign predators. Yesterday’s letter pointed to the sharp dip in British pension fund allocation to UK equities, from 53 per cent in 1997 to 4 per cent this year – equivalent to withdrawing £25billion of investment from companies every year. It is significantly lower than the global average for defined contribution funds of 13pc invested in domestic equities, the letter argues. And it said this has ‘real consequences for UK growth’ as smaller firms struggle to attract funds and decisions about UK firms are made by foreign investors. ‘Now is the time to back ourselves, ensuring British companies have the capital they need and that British savers benefit from the growth they help create,’ the letter added.
