Widespread concern over proposed government involvement in pension investment

New research reveals widespread uncertainty over a proposed government power to require pension providers to invest savers’ money in assets of its choice, reinforcing industry calls for the power to be dropped.

A new YouGov survey, commissioned by the ABI, on the government’s proposals to enable mandated pension investment finds that an overwhelming 72% of adults in the UK have little or no confidence in the government to make the right decisions about how their pension is invested. Only 1% have a lot of confidence.

46% of adults aged over 45 think requiring pension funds to invest in certain assets would negatively impact the amount of money they’ll have in their retirement. A further 28% are unsure of the impact it may have, while 21% think it would have no real impact. Just 5% believe these requirements would have a positive impact.

When asked their opinion on government plans to give itself the option to mandate pension funds to invest an unspecified proportion of people's pensions in specific areas set out by the government, such as in UK companies or infrastructure, 49% of UK adults said it was a bad idea. 27% are unsure and only 24% say it’s a good idea.

Looking ahead, 71% of UK adults say they have little or no confidence that future governments would use a power allowing them to direct pension investment into certain areas responsibly. Within this group, almost one in three (31%) say they have no confidence at all.

Yvonne Braun, director of long-term savings policy at the ABI, said: “These results reveal deep unease about plans to force pension funds to invest savers’ hard-earned money by government diktat. People need confidence that pension funds and government are acting in their best interests, but many fear these plans could threaten their retirement living standards.

"Mandation risks eroding public trust in the entire pensions system, both now and in the future. We strongly support investment in the UK economy, which is why we helped create the Mansion House Accord. But investment must always be driven by savers’ best interests, and that principle should not be compromised.”