MPs have been accused of showing a \u201cvote of no confidence in UK companies\u201d after the pension scheme for politicians invested far less of its equity portfolio in domestic shares than private sector peers.<\/p>\n
The MPs\u2019 pension scheme has less than 3 per cent of its equity portfolio invested in UK shares, despite pressure on the pensions industry from Rachel Reeves to boost investment in the London stock market. <\/p>\n
The parliamentary contributory pension fund, which has a total of \u00a3855.5 million of assets, had \u00a312.8 million allocated to UK stocks at the end of March, compared with \u00a3462.3 million in global equities, its recently published annual report shows.<\/p>\n
It compares with an average allocation of 12 per cent of listed UK equities across private sector defined benefit schemes, according to research by the Pensions Policy Institute.<\/p>\n
The Labour Party\u2019s general election manifesto made a commitment to increasing investment by pension funds in UK assets.<\/p>\n
The chancellor has made pensions reform<\/a> a central part of the government\u2019s attempts to increase investment and to kick-start lacklustre economic growth. It has included moves to consolidate pensions funds and encourage them to increase allocations in UK assets.<\/p>\n \u201cI have always believed that the parliamentary pension scheme should show leadership in backing Britain, but it has done the opposite for many years,\u201d Baroness Altmann, the former Conservative pensions minister, said.<\/p>\n \u201cBut the trustees have chosen to use the money to boost other countries and not our own. If UK parliamentarians are showing such a vote of no confidence in UK companies and markets, one has to wonder how the government expects ordinary investors or overseas institutions to invest in our economy.\u201d<\/p>\n Across other assets, though, the fund had about 22 per cent of assets invested in the UK. This included corporate and government bonds, property and infrastructure investments. An update to the fund\u2019s investment strategy next month is also set to include a further allocation to a new UK investment.<\/p>\n Peel Hunt, the City investment bank, which has been campaigning to reinvigorate UK capital markets<\/a>, said last year that changing the \u201cpaltry\u201d allocation to UK equities in the MPs\u2019 pension fund \u201cwould be an excellent way to demonstrate commitment to accelerating UK growth and setting an example for other schemes\u201d.<\/p>\n Peel Hunt\u2019s research found that at its 2017 peak the fund held about \u00a3130 million in UK equities which meant that not only had the fund sold down its UK holding to a \u201cvery low level\u201d but also that it was \u201cmaterially underweight\u201d versus the UK\u2019s share of global equities.<\/p>\n Charles Hall, head of research at Peel Hunt, said: \u201cThe UK does not have a shortage of capital. The problem is that most of it funds growth in other countries rather than our own \u2026 If we want the UK economy to prosper we have to ensure that UK capital backs UK companies. The MPs can take a lead to show how important this is and to drive fundamental change in our pensions.\u201d<\/p>\n \u2022 Seema Shah: Give pension funds a reason to invest in the UK \u2014 don\u2019t threaten them<\/a><\/p>\n The trustees of the MPs\u2019 scheme include senior cross-party politicians, including Dame Meg Hillier, the Labour chairwoman of the Treasury select committee.<\/p>\n \u201cIf governments from both parties want pension funds to invest more <\/a>in the UK, then it rather makes a mockery of things if the parliamentary pension scheme does the opposite,\u201d Sir Jeremy Hunt, the former Conservative chancellor, told the Financial Times, which first reported the latest figures.<\/p>\n