Pension savings should be invested in UK companies, BCC says
To replace overseas finance, Haldane suggested that British occupational pension schemes should by default be invested in British equities rather than the world stock indices
Britons’ pension savings should be invested by default in British companies and the government should rethink tax relief where savings are invested internationally, Andy Haldane, the president of the British Chambers of Commerce, said on Thursday.
Haldane served as the Bank of England’s chief economist from 2014 to 2021 and more recently is reported to have been advising former Greater Manchester Mayor Andy Burnham who is expected to succeed Keir Starmer as Britain’s prime minister next month.
British startups often struggle to access capital to grow. Where they do, they are sometimes bought out by foreign companies, which Haldane said damaged Britain’s longer-term growth prospects.
The UK should remain open to FDI (foreign direct investment) but we simply cannot afford to allow the continuation of overseas stripping of our greatest growth asset – innovative businesses – on this scale. Doing so is tantamount to willingly sacrificing growth and jobs, he told the BCC’s annual conference in London.
To replace overseas finance, Haldane suggested that British occupational pension schemes should by default be invested in British equities rather than the world stock indices.
This is not about constraining choices. This is about correcting that home bias in how that huge pot of money is currently allocated, he said.
This type of proposal has previously been met with criticism from industry experts who say forcing pension funds to invest domestically would harm savers by concentrating risk and delivering lower returns, while failing to address why British companies struggle to attract investment in the first place.
Haldane also described the £60 billion a year of tax relief on pensions and other savings as offering a spectacularly low return on investment for the UK government where savers invested it in overseas companies or foreign government bonds.