(8 January 2026 – United Kingdom) Using retirement funds to spark economic growth could be counter intuitive for savers interests as pension leaders express concern that being pressured to invest in certain asset classes could compromise their responsibility to maximise returns for savers.
The UK, Canada, Netherlands and Germany have identified an opportunity to redirect large and growing pension savings towards domestic investment to try to kick-start economic growth and redirect capital to sectors such as technology, defence and green energy.
The UK government is introducing legislation to enable regulators to force a minimum amount of investment into private assets should pension funds not honour their commitment. Last year the Pension Protection Fund (PPF) announced that it would commit to investing ten percent of its assets in British infrastructure and scale-up companies if the government broadens its remit to allow it to absorb smaller schemes.
Some pension fund industry executives fear such moves could hit investment returns and disincentivise saving however, Mary McDougall reports for FT.
The UK has been one of the most active countries seeking to channel pension savings domestically using a number of reforms to consolidate its pension system. Chancellor Rachel Reeves hopes the moves will push up to GBP80 billion into “productive assets” such as private companies and infrastructure with half of this to flow to the UK.
“The money in people’s pensions should not be a plaything of governments. It is already hard enough to get people to lock money away and save for the long-term, and confidence in pensions could be seriously undermined if savers believe that their best long-term interests are no longer the top priority of their pension scheme” commented LCP Partner and former pensions minister in the UK coalition government, Sir Steve Webb.
“The global drive for more domestic investment could create competing pressures of balancing savers’ best interests with national priorities” said Mercer Partner Tim Jenkins.
The Mercer UK Private Equity Review found that pension schemes remain essential capital sources for private equity (PE), especially those managing assets above GBP10 billion. To unlock greater pension fund investment, however, PE firms must prioritise educating trustees on PE’s portfolio benefits.