Latest news with #Legal&General
Spectator
3 days ago
- Business
- Spectator
Why is your pension fund so obsessed with net zero?
Legal & General is Britain's largest asset manager, with over £1 trillion on its books. Every pound it manages should be dedicated to achieving the highest possible returns. This matters a lot: L&G manages over five million pensions in the UK. But in recent years, the asset manager has been particularly concerned with fashionable causes, instead of being entirely focused on making sure your retirement is secure. That is why I recently attended their AGM. I wanted to learn why the board is wedded to net zero, despite their fiduciary duty to clients, and whether they would consider reprioritising saver returns instead. At the Q&A I highlighted that US competitors have dropped their net zero ambitions. Most have pulled out of the 'Net Zero Asset Owner Alliance' – a UN-led consortium of asset managers 'committed to decarbonising their investment portfolios and achieving net-zero emissions by 2050.' L&G – along with most other British pension fund managers – is still a part of this alliance. But their commitment to decarbonising their portfolios and advocating for 'public policies, for a low-carbon transition' are premised on a net zero consensus that no longer exists. At the moment, roughly half of the public support either Reform or the Conservatives. Both parties oppose net zero by 2050. It is therefore reasonable to assume, as I told the board, that many with L&G pensions, do not want their retirement outcomes subordinated to the green agenda. In response, the board told me that its clients want to align with net zero by 2050. Whilst the board acknowledged that complex trade-offs exist, they did not explain what these were. Instead they doubled down, reaffirming their net zero commitment, before asserting that decarbonisation offers stellar investment opportunities. The problem is that these opportunities rely on government subsidy.
Yahoo
4 days ago
- Business
- Yahoo
Will Labour's pension changes actually save you an extra £6,000?
The government says millions of workers could get a £6,000 boost to their retirement fund as a result of wide-ranging pensions reforms. On Thursday, Rachel Reeves revealed more details of the Pension Schemes Bill, which will pave the way for the creation of more so-called "megafunds" managing at least £25 billion in assets within the next five years. Earlier this month, 17 major workplace pension providers signed a voluntary agreement called the Mansion House Accord, with a view to boosting pension returns. Aviva and Legal & General are among the providers who have committed to invest at least 10% of their workplace pension portfolios in assets like UK infrastructure, property and private equity by 2030. The government says the agreement will be good news for those who have defined contribution (DC) pensions - the most common type of private pension in the UK. Here's what the reform means in real terms — and how likely it is that savers will gain a £6,000 pension boost. A defined contribution (DC) pension is a type of pension scheme where you (and if it's a workplace pension, your employer) contribute money into a personal pension pot. The money you and your employer contribute is invested by your pension provider. The value of your pension at retirement depends on how much has been paid in and how well the investments perform. Pension providers typically invest in a mix of assets, including stocks and shares (also known as equities), government and corporate bonds, property, and commodities, like gold and cash. This mix is chosen to balance risk and reward, meaning that your pension will benefit from long-term growth while also managing potential losses. Labour says the changes will benefit defined contribution (DC) pension savers by harnessing higher potential net returns available in private markets. According to the government, the signatories to the accord have said that £252 billion of assets are subject to the pledge. Helen Morrissey, the head of retirement analysis at financial services company Hargreaves Lansdown, said that while "there needs to be an element of flexibility" around the £6,000 uplift, the "increased efficiency" of the reforms looks like a positive step to boost defined contribution members' pots. She told Yahoo News: 'Markets can go up and down and this can have an impact on a member's pot. "However, these reforms look to enable schemes to invest in asset classes that were previously closed to them and there is potential for increased returns as a result. "The key to this will be access to a stream of high-quality opportunities and the government has committed to helping schemes deal with barriers that have previously stood in their way. "Increased efficiency will also help boost member pots. One of the key benefits of scale is that it enables schemes to drive down costs and the impact assessment shows this can have a material impact on the size of pension," she added. It is a combination of these increased efficiencies that will reduce pension fees, as well as the higher returns that the government has used to calculate the £6,000 figure. However, Sir Steve Webb, a former pensions minister, cautioned that the sum was "marginal at best", telling the inews that savers would need to start paying into their pensions from the age of 22 and never miss a year until retirement to potentially secure the maximum amount. When factored into the total size of the average retirement pot and how long they are used for Sir Steve said it is probably worth under £10 a week on your final pension. He added: "None of this factors in the costs of some of the other measures which they are proposing, which include creating a new process for the consolidation of micro pots, which will cost a lot of money to administer, and which will presumably increase pension costs." "They're clearly aiming to provide a 'retail' message to go alongside all this talk of multi-billion-pound pension schemes, but to be honest, this £6,000 figure is marginal at best.' The reforms enable pension funds to invest in major infrastructure projects and private businesses, which historically have delivered higher returns. The plan covers retirement savings for the majority of UK workers in two ways. Firstly, there are the 86 different local authority pension schemes, which provide for more than six million people in their retirement, the majority low-paid women. The £392bn in these schemes will be merged from eight pools to six asset pools by next March, reducing overheads and maximising returns. Local investment targets will also be agreed for local authority pension schemes for the first time, the Treasury said. Secondly, defined contribution schemes currently worth £800bn, covering millions of other private and public sector workers across the country, will also be consolidated. This will reduce management fees and operational costs, and boost savings for savers. Because of this, by 2030, the government says there should be more than 20 pension funds worth more than £25bn, in contrast to the current 10 available. While the move was agreed earlier this month, the government has now introduced a legislative back-stop, which will allow it to push through the new rules if insufficient progress is made by the end of the decade, according to the BBC. The 17 providers who have signed up are: Aegon UK, Aon, Aviva, Legal & General, LifeSight, M&G, Mercer, NatWest Cushon, Nest, now:pensions, Phoenix Group, Royal London, Smart Pension, the People's Pension, SEI, TPT Retirement Solutions and the Universities Superannuation Scheme (USS). The Pension Schemes Bill is due to be heard during this term of Parliament.
New Straits Times
14-05-2025
- Business
- New Straits Times
British pension funds pledge US$66bil boost for private assets
LONDON: Major British pension funds pledged on Tuesday to pump up to 50 billion pounds (US$66 billion) of additional investment into UK businesses and infrastructure, as the government leans on private capital to fund public projects and boost growth. Seventeen investment firms, including Aviva, Legal & General and M&G, said they would invest up to 10 per cent of their pension portfolios in infrastructure, property and private equity by 2030, according to a government statement. Half will be ringfenced for UK assets. Tens of millions of workplace pension scheme members will now see more of their savings invested in higher-risk, potentially higher-reward assets like early-stage businesses and green energy, alongside stocks and bonds. Ordinary savers and their pension fund managers will compete head to head with private equity and specialist investment firms in a market investment data firm Preqin estimates will exceed US$30 trillion by 2030. Chancellor of the Exchequer Rachel Reeves said in a statement the "bold step" by Britain's biggest pension funds would deliver growth and give working people greater financial security in retirement. The new Mansion House Accord doubles a 2023 target to invest 5 per cent of pension pots in productive assets and broadens the range of applicable assets. "We have long believed that UK pension savers should benefit from exposure to the higher returns provided by private markets," António Simões, Group Chief Executive Officer of L&G, said in a statement. Other participating funds include the Universities Superannuation Scheme, the National Employment Savings Trust and The People's Pension. Signatories to the accord are expected to gain improved access to the British Business Bank's pipeline of UK venture capital opportunities after the Financial Conduct Authority approved the launch of the lender's British Growth Partnership. INCENTIVES, NOT MANDATES The pledges agreed on Tuesday are currently voluntary. But the government said it would monitor progress against the commitments, which will be reinforced by further measures in an upcoming pensions review. The Financial Times and other media have reported that the government is considering forcing pension funds to invest more in UK projects, worrying some executives who argue such a move would not be in the best interests of clients. "We believe the most sustainable solution lies in creating the right incentives, not mandates," a spokesperson for one of the signatories, Phoenix, said. Britain's finance ministry was not immediately available for comment. A YouGov survey of 1,563 UK pension savers commissioned by workplace savings and pensions fintech NatWest Cushon showed 52 per cent of respondents agree that pension funds should invest more in the UK.
Yahoo
13-05-2025
- Business
- Yahoo
Britain's biggest pension funds to invest billions in major projects - what it means for you
Pension funds across the UK have committed to invest tens of billions in British infrastructure projects and businesses in a move welcomed by Rachel Reeves. Seventeen workplace pension providers that manage 90% of defined contribution pensions have signed a voluntary agreement called the Mansion House Accord, with a view to boosting pension returns as well as the UK economy. Aviva and Legal & General are among the providers who have committed on Tuesday to invest at least 10% of their workplace pension portfolios in assets like UK infrastructure, property and private equity by 2030. The Chancellor said she backed a "bold step" she said would "unlock billions" — apparently to the tune of £25bn — by 2030. The Conservatives, meanwhile, have said that 'pension savings should never be there to dig a chancellor out of the economic hole that she has made'. Here's what we know about the plan so far — and what it could mean for your pension pot. The agreement is said to be good news for those who have defined contribution pensions - the most common type of private pension in the UK. A defined contribution (DC) pension is a type of pension scheme where you and, if it's a workplace pension, your employer contribute money into a personal pension pot. The money you and your employer contribute is invested by your pension provider. The value of your pension at retirement depends on how much has been paid in and how well the investments perform. Pension providers typically invest in a mix of assets, including stocks and shares (also known as equities), government and corporate bonds, property, and commodities, like gold and cash. This mix is chosen to balance risk and reward, meaning that your pension will benefit from long-term growth while also managing potential losses. From Labour's perspective, the agreement aims to help defined contribution (DC) pension savers by harnessing higher potential net returns available in private markets, as well as strengthening investment in the UK. The move is also designed to help pension funds achieve better long-term returns for savers and to make the UK pension system more resilient and beneficial for pensioners. According to the government, the signatories to the Accord have said that £252 billion of assets are subject to the pledge. Based on a growth rate of 17% per year, the government says these funds could be worth around £740 billion by 2030. Lily Megson, the policy director at My Pension Expert, an independent financial advice service, welcomed the move. "Any move to help savers to achieve the retirement that they want is a really positive move," she told Yahoo News. "It does demonstrate potential for higher returns for pension savers, which again, in theory, is a positive step forward." However, the full scale of the benefits will only be made clear when more detail about the Accord is released — both from the government and the pension providers. "What we would like to see providers do now is really to use this opportunity to enhance the way that they communicate with savers," Megson said. "Another key factor is using this as a real opportunity to encourage people to really engage with their pension so they understand exactly where their money is, and more importantly, what this drive in UK investment could mean for them in terms of how it could improve their overall financial outcomes. "As it stands, while it's positive moves for the government to invest in the UK industry, it's still less clear as the details are yet to be announced." The pensions regulator has also supported the move, saying: 'Savers rightly expect good performance from their pension investments. That's why we welcome this latest initiative, which could both boost returns for pension savers whilst also potentially unlock more capital for investment in the UK economy.' Those signing up are: Aegon UK, Aon, Aviva, Legal & General, LifeSight, M&G, Mercer, NatWest Cushon, Nest, now:pensions, Phoenix Group, Royal London, Smart Pension, the People's Pension, SEI, TPT Retirement Solutions and the Universities Superannuation Scheme (USS). Yvonne Braun, director of policy, long-term savings, health and protection at the Association of British Insurers, said: 'Investments under the accord will always be made in savers' best interests. 'It is now critical that Government supports the industry's ambition, by facilitating a pipeline of suitable investment opportunities, tackling barriers to investments, and delivering wider pension reforms effectively.' The pension investment review report will outline the plans in detail later this year.
Yahoo
13-05-2025
- Business
- Yahoo
Pension funds ‘to unlock up to £50bn' of investment, with half for UK firms
The bosses of 17 of the UK's biggest pension funds have struck a deal with the government that it claims will release up to £50bn worth of investments, with at least half earmarked for British assets including clean energy projects and homegrown startups. Fund managers including Aviva, Legal & General, M&G, Phoenix and the Universities Superannuation Scheme have agreed to sign a new 'Mansion House accord' that will lead to at least 10% of their workplace pension schemes being invested in private market assets by 2030. Half of that money (5%) will be earmarked for UK investments, including stakes in private British businesses, property and major infrastructure projects, all areas of focus as the government tries to kickstart the economy. Related: Reeves's Mansion House accord on pension funds is long on virtue-signalling The new accord doubles the size of commitments made under a deal arranged by the Conservative government in 2023, known as the Mansion House compact. Led by the then chancellor, Jeremy Hunt, signatories agreed to allocate 5% of funds to private assets, with no stipulation about keeping any of that money in the UK. The chancellor, Rachel Reeves, said: 'We are choosing to back British businesses and British workers. I welcome this bold step by some of our biggest pension funds, which will unlock billions for major infrastructure, clean energy and exciting startups.' However, some pension fund providers are understood to be wary about any government efforts to force firms to put money into British assets, which could result in poorer returns for retirees compared with overseas investments, possibly breaching their fiduciary duties to clients. While the accord itself does not mandate UK investments, there are concerns that the pensions bill, due later this year, could leave the door open for the government to dictate how fund money is used. Zoe Alexander, the director of policy and advocacy at the Pension and Lifetime Savings Association, said the government, for its part, had 'committed to take action to ensure there is a strong pipeline of investable assets for pension schemes. With everyone playing their part, there is great potential to boost returns for savers while providing vital funding to productive growth areas.' The voluntary pact covers signatories' defined contribution pension schemes, which do not guarantee a set income at retirement, and are the default plan for most UK workers. The 17 signatories, which also include Aegon UK, Aon, M&G and Mercer, manage combined portfolios currently worth £252bn, suggesting UK investment commitments worth just £12.6bn. However, the government's calculations predict those portfolios will grow by about 17% per year, and possibly further under government pressure to consolidate retirement schemes into national 'megafunds' that are intended to replicate success stories in Canada and Australia. The Treasury believes that will leave the pension providers with portfolios worth £740bn by 2030, and roughly £50bn of new funds for private market investments, when discounting for existing commitments. Around half that – £25bn – would therefore be aimed at UK projects and startups. Many pension providers already allocate funds to private assets, including in the UK, meaning that it may not necessarily lead to a large injection of cash from individual pension providers. The Mansion House accord comes as the government tries to tackle concerns about a lack of domestic investment in the UK. But the Treasury has been juggling competing interests, with lobbyists also calling for reforms that could simultaneously boost ownership of stock-exchange listed companies. London lost out on a raft of blockbuster listings in recent years, including by UK chip designer Arm, which opted to list on Wall Street in August 2023. The buy now, pay later company Klarna followed suit, while other companies such as Paddy Power owner, Flutter, and the travel company Tui opted to switch their primary listings from London to rival hubs such as New York and Frankfurt. However, the metals investment company Cobalt Holdings bucked the trend on Monday, announcing plans to float in London in June in a rare boost to the UK stock exchange. Cobalt is planning to raise roughly $230m (£174m), with commodities trader Glencore due to take a 10% stake. The government is also expected to launch a consultation in coming weeks on a possible shake-up of the Isa market to incentivise more investment in British stocks via the tax-free accounts. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
