More than 250 senior business leaders have written to Labour Party Chancellor Rachel Reeves, urging her to use the upcoming Autumn Statement to compel UK pension funds to increase their investments in British companies. The proposal calls for pension schemes to allocate at least 25% of their equity holdings to UK firms, a move that could unlock as much as £95 billion in private investment.
The letter highlights a concerning trend: pension fund investments in UK-listed companies have plummeted from 53% of total equity holdings in 1997 to a mere 4% in 2023. Business leaders argue this decline harms domestic businesses and the broader economy by limiting access to reliable capital.
“By setting a mandate for pension funds to invest a quarter of their equity portfolios in UK shares, the government can reverse decades of capital flight,” the letter states. “This would align the UK’s pension investment strategy with international standards and provide businesses with deeper pools of domestic funding.”
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The signatories emphasize the potential economic impact, noting that defined contribution pensions alone could boost UK equity investment by approximately £76 billion by 2030, rising to nearly £95 billion in today’s money—a 230% increase from current levels.
The letter also points to public sentiment supporting this policy change. According to a poll commissioned by New Financial, most people overestimate the proportion of their pension invested domestically, believing 41% is held in UK companies—ten times the actual figure. Furthermore, 72% of respondents backed government action to promote greater domestic investment through pension schemes.
With the Autumn Statement scheduled for November 26, all eyes will be on Chancellor Reeves to see whether she embraces this push from the business community to strengthen UK investment through pension funds.