UK Government Targeting Pension Asset Equities Shift
(23 June 2023 – United Kingdom) British government officials are pushing to redeploy the flow of the largest value of pension assets outside the US from bonds into equities to reclaim London’s status as the world’s #1 financial hub over New York.
With US$3.57 trillion in assets at the end of 2021 according to the Organization for Economic Cooperation and Development (OECD), United Kingdom (UK) leaders lament the long term asset shift that has starved British enterprises of much needed capital, resulting in many transferring to United States (US) listings.
A UK government commissioned capital markets task force is mandating changes, including consolidating over 32,000 pension schemes. The task force reports greater scale would allow for larger scale investments and recommends tax incentives to encourage pensions to invest in UK equities.
Chancellor of the Exchequer Jeremy Hunt stated that the UK government plans to propose pension-rule changes in H2 2023 but hasn’t released further details. UK government debt surpassed GDP for the first time in 62 years this month as the Bank of England (BoE) surprised the market by raising interest rates half a percentage point to five percent following stickier inflation and wage growth.
“Our fiduciary duty lies with pension holders, not the stock market or the UK economy. That means not taking any risks with their money, particularly as hordes are about to retire. I am going to invest in safe assets that give me cash flows: government bonds, corporate bonds” commented Cardano Group CEO UK, Kerrin Rosenberg.
“I’m doing that not because I’ve got an investment opinion, not because I care about the stock market, but because my job is to pay the pension. Shares are too volatile. They don’t give reliable cash flows. In addition, pensions increasingly purchase global stocks rather than focusing on domestically listed companies.”
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