The majority of UK pension schemes believe it is essential that they continue to be given complete freedom over investment decisions, provided they invest in line with members' interests, according to research from the Pensions and Lifetime Savings Association (PLSA).

The government has recently faced calls to direct the investment choices of pension funds so that, instead of focussing primarily on the interests of scheme members, they should also be required to invest in certain asset types, with a specific focus on calls to invest in UK growth and calls to support the green transition.

However, neither the government nor the opposition has proposed that politicians direct where pension funds should invest, an approach which the PLSA said is supported by the pension fund sector in light of the findings.

Indeed, the analysis found that three quarters (75 per cent) of defined benefit (DB) and two thirds (66 per cent) of defined contribution (DC) pension schemes believe it is essential that they continue to be given complete freedom over investment decisions, provided they invest in line with members' interests.

Other options to encourage greater investment in specific areas received more industry support though, as the PLSA found that most funds (70 per cent) would invest more in UK companies and markets if the government introduced specific fiscal incentives for investment in UK assets.

Savers also supported this idea, as the research found that 67 per cent of savers think the government should provide such incentives.

More work is also needed to support pension fund investment in the green transition, as just 10 per cent of DB pension schemes and 14 per cent of DC schemes felt that the government, so far, had adopted the right strategy to attract pension fund investment in the green transition.

In light of this, the PLSA emphasised the need for the government to adopt a UK transition plan and a green taxonomy to help pension funds make the right decisions on green investment.

Commenting on the findings, PLSA director of policy and advocacy, Nigel Peaple, stated: "Our latest research into pension fund investment issues reveals some interesting views from pension fund managers and savers on several of the key investment issues facing us today – investment freedom, investing in UK growth, and investing in the green transition to combat climate change.

“We look forward to discussing these issues in depth at our Investment Conference this week.”

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