U.K. managers and investors want the U.K. government and regulators to enable greater defined contribution allocations to alternatives and open extra options to boost retirement saver returns long term.
The Pensions & Private Capital Expert Panel, which was convened by British Private Equity & Venture Capital Association, includes representatives from the Association of British Insurers, the Pensions and Lifetime Savings Association, Legal & General Group, M&G and National Employment Savings Trust, London which had £36.8 billion ($46.8 billion) in assets as of Dec. 31.
In the report, published Sept. 11, the panel calls for the U.K. government to use the proposed "Value for Money" framework, designed as a set of metrics and standards that assess the value of defined contribution plans, to help them move away from short-term cost considerations and focus on long-term returns.
“Getting more DC pension investment in fast growing businesses could be a game changer for our economy – providing finance for some of our most exciting sectors. It also means pensions savers can benefit from more diversified portfolios and the strong returns private capital can deliver,” BVCA CEO Michael Moore said in a news release.
The report also calls on the U.K. Labour government and wider industry to learn from how other nations have increased investment by DC plans in growth-stage businesses, including the French Tibi initative, which aims to increase the financing capacity of technology companies by having institutional investors invest capital in the sector.
“The recommendations agreed by the expert panel highlight how much consensus there is between the pensions industry and private capital to achieving the Mansion House Compact objectives,” said Kerry Baldwin, chair of the Pensions & Private Capital Expert Panel.
The expert panel was established in February and has worked to develop solutions to the current structural challenges that exist in U.K, underpinned by the Mansion House Compact, where 11 of the U.K.’s largest DC plans and insurance companies agreed to commit 5% of their default funds under management to unlisted equities by 2030.
The report is available for download on the BVCA website.
