Key facts
- London Stock Exchange CEO Dame Julia Hoggett advocates for increased transparency in pension fund investments.
- Hoggett argues that clearer reporting would encourage greater allocation to UK equities and private assets.
- She believes the UK is an outlier for offering tax incentives without requiring domestic investment in return.
- The call comes amid concerns about the health of London's capital markets and difficulties for UK companies in raising funds domestically.
- Just 4% of UK pension schemes' capital is held in UK assets, a low proportion compared to other developed nations.
Dame Julia Hoggett, the head of the London Stock Exchange, has called for greater transparency from pension providers regarding their investment portfolios. She argues that making it easier for savers to see where their retirement funds are invested would encourage a larger commitment to UK equities and private assets.
Hoggett stated in an interview with City AM that such transparency is crucial for measuring the tangible impact of initiatives aimed at boosting domestic investment. She suggested that the UK is unique in offering tax incentives without requiring a reciprocal investment in the UK economy.
This intervention comes as the UK's savings sector faces increasing pressure to allocate more capital to the domestic economy. Despite having the world's second-largest pension pot, only about 4% of schemes' capital is invested in UK assets, a significantly low figure compared to other developed countries. Over the past two decades, investment in London-listed equities has dropped from over 50% to approximately 4.4% of the average pension fund.
The pension industry has resisted mandatory ring-fencing of funds for domestic investment, citing fiduciary duties and concerns about the availability of attractive UK assets. However, Hoggett's comments highlight growing concerns about the health of London's capital markets, with many fast-growing companies and infrastructure projects struggling to secure funding from domestic investors and often turning overseas.