The Pensions and Lifetime Savings Association (PLSA) and the Association of British Insurers (ABI) have called on the government to consider taking further action in four key areas to attract greater pension investment in UK growth.

The associations stated that whilst progress on increasing pension investment in UK growth had been good, more needs to be done, identifying four key measures that could help improve growth.

The government was urged to consider ensuring better adequacy in defined contribution (DC) pensions and a bigger pool of investable capital, noting that most private sector pensions were DC, but low contribution levels were risking shortfalls in retirement.

Clarity on the long-term strategic plan for increasing DC pension contributions was desired by the industry, the associations said, and they wanted to see more progress on how the government plans to make auto-enrolment changes.

The pair also called for regulations to be made to work better for investment and savers.

This included regulation that would make it as simple as possible to invest in illiquid assets when it’s in the interest of savers, and government monitoring and regulation of the quality of advice trustees and employers receive.

Increased investment opportunities was also identified as a measure to be targeted, with the government urged to help develop an effective pipeline of assets with good risk/reward profiles for pension schemes to invest in UK growth.

Finally, the PLSA and ABI called on the government to continue focusing on consolidation while ensuring it takes place in the best interest of pension scheme members.

"UK pensions already invest around £1trn in the UK economy, in particular through their ownership of government and corporate bonds and listed equities,” commented PLSA director policy & advocacy, Nigel Peaple.

“The PLSA and ABI have worked together to identify what more government can do to attract further pension investment in the UK, provided the investment is in line with the interest of savers.

“This is a complex area, but we have picked out four areas for action: Higher pension contributions, the right regulation, government action to support investment opportunities and measures that enable the consolidation of pensions that is already underway.

"Taken together our organisations believe this is the right way to support growth in the UK and to look after the interests of pension scheme members."

ABI director of long-term savings policy, Dr Yvonne Braun, added: “Together, ABI and PLSA members safeguard £2.5trn of assets for the retirements of millions of workers in the UK.

“We strongly support the government’s desire to ensure these assets work as hard as possible for savers, while also fuelling UK growth.

“But optimising asset allocation is not enough. We also need to ensure people save enough, regulation works, there is an effective pipeline of investment opportunities, and much greater consolidation. All this will drive UK growth, and we will continue to work with our partners at PLSA and with government to advance this agenda.”

---