The Association of Investment Companies, (AIC) has voiced its frustration at the incoming Pension Schemes Bill failing to include investment companies.
The bill aims to strengthen pension investment by giving government powers to push schemes to invest a percentage of their portfolio in private assets.
However, in the drafted legislation which is passing through the Commons, pension schemes would not be able to meet this requirement by investing in listed investment companies that hold private assets.
The AIC believes the failure to include investment companies in the bill would damage the UK’s industry by driving up costs and offering lower quality returns for savers.
Richard Stone, chief executive of the AIC said: “It is very frustrating that the government did not amend the Pensions Schemes Bill in the House of Commons.
For pension savers to achieve the best outcome, we need a competitive market which includes the widest choice of investments, and this includes investment companies… excluding investment companies would be bad for competition.”
Investment companies have injected over £110bn into private assets, including critical areas for growth such as infrastructure and energy, as well as property and venture capital.
Change the bill
The body is now urging the government to amend the Bill upon entering the House of Lords.
Stone said: “Investment companies are a tried and tested way for all investors, to access privates assets…providing vital capital and helping support UK growth.”
The AIC has previously written to pensions minister, Torsten Bell, in efforts to amend the bill, calling its powers ‘seriously flawed’.
It continued: “This contradiction reflects a longer-term pattern where the government claims to support the sector then fails to show that support when it is making actual policy decisions.”
The Bill is also set to introduce a system to consolidate small pension pots as well as a value for money framework which will require defined contribution schemes to assess their performance and services.