06 Aug UK leaders urge pension funds to support an innovative and greener future
UK leaders are encouraging investors and pension schemes to focus investment in long-term assets to provide savers with higher returns. The hope is this will drive the economic recovery towards a more innovative and greener future in the UK.
The open letter drafted by the PM and Rishi Sunak requests investors allocate a higher proportion of their capital towards long-term assets in the UK, including infrastructure and emerging, innovative businesses, allowing pensions savers to gain better and greener returns.
The letter highlights that the government is focusing on building back better. It details the commitment of the UK to green technologies of the future. The letter explains that investors should consider more long-term assets in the UK, providing pension savers with access to better returns and enabling people to see how their funds can support a more creative and sustainable future. The letter admits that this transformation will require a shift in mindset for many investors and may take some time, but that it is something that needs to be acted upon now.
A growing number of leading pension funds have started implementing net-zero targets for their portfolios in recent times, but there has been a call for the industry as a whole to commit to net-zero. David Haymen, the campaign director at Make My Money Matter, a project focused on driving pensions towards net-zero supported the recent letter and openly encouraged investors to place their money in a greener future.
Hayman highlighted that it is positive to see the government recognise the influence of pensions in supporting a better future but emphasised that with the mounting climate challenge we face, UK pension funds must focus on directing money towards cleaner and greener investments. Pensions providers must be open to their members, to the science and willing to commit to clear net-zero targets by 2030.
In response to the letter, pensions and investment advisors Lane Clark and Peacock emphasised that the positive words in the letter must translate into action. Long term investors are looking consistently for stable returns from UK based businesses and projects that combine commercial gain with extended sustainability and social responsibility. Trustees will be open to investing in long-term projects but require the government to eradicate any barriers that hinder investment into these specific projects.
Trillions of pounds are invested into UK pensions, which could play a massive role in transforming how the country develops in the future. UK customers will also benefit from these changes, as returns on long term investments have the potential to generate an accelerated boost to retirement funds.
Industry groups have for some time encouraged UK pension savings to be expanded further within infrastructure and economic initiatives across the country. It is positive to see that the government appreciates the barriers that limit long term investments. The reality is that pension scheme trustees have a moral duty to invest customers’ retirement pots in the most effective and sensible method, considering several different factors such as level of risk, cost and increasingly, more importantly, the environment.