The pension system needs “big reform” to ensure people receive higher returns, UK chancellor Jeremy Hunt has suggested.
According to The Daily Telegraph, the chancellor made the remarks while speaking in Washington DC, where he is attending the International Monetary Fund’s spring meeting with other senior finance ministers.
“Countries like Australia and Canada have found a way of making sure that they get better returns by consolidating their pension fund industry in a way that makes it easier for them to invest in unlisted and potentially higher growth vehicles, and that’s the thing I think needs to be worked on,” he said.
Hunt reportedly added that Jonathan Symonds, a non-executive chair of GSK PLC, is also providing informal advice to the Treasury on how to get higher returns on money invested in defined contribution pension schemes.
The schemes will provide the “biggest opportunities to unlock investment in to high-growth British industries”, Hunt said.
Symonds will join the chancellor’s council of economic advisers alongside four other economists, where he will provide advice on pensions on an ongoing basis.
Asked if pension schemes should be forced to invest in the stock market as opposed to lower risk bonds, Hunt reportedly said:
“It’s not something I would instinctively be comfortable with, because I think one of the strengths of the City is that we give financial institutions complete freedom to invest where they think they will get the best returns for the people whose money they’re looking after.
“But we’re looking at all these issues. My concern is that pensioners and future pensioners are not getting the returns that they could expect.”
His remarks are the latest central government flirtation with the idea of higher-risk investing, after The Department for Work & Pensions was tasked with exploring ways to unlock growth in the UK economy via the auto-enrolment system.
Last month, the chancellor used his spring budget to abolish the tax-free limit on pensions savings, which had stood at £1.07 million.
By Ben Hatton, PA Political Staff, with additional reporting by Ollie Smith
