UK pension funds invest almost £1tn in the UK through a mixture of UK shares, corporate bonds, government debt and other asset classes, according to a paper by the Pensions and Lifetime Savings Association in June 2023.
While their investments need to meet savers’ requirements, the PLSA said pension funds can also act as a source of capital for owning the “right sort” of UK growth assets.
“If the national wealth fund was designed in the right way, there would be interest from the industry,” Francis says. “But structuring something which meets the needs of the whole sector is challenging, as the defined contribution industry naturally has a different risk appetite to the closed, mature DB sector, which is primarily seeking income-generating assets.
“For the national wealth fund to succeed, cross-party support for it is imperative, so investors have confidence it will have longevity beyond one parliament.”
Chloe Cheung is a senior features writer at FT Adviser
