Latest news with #UKequities
Daily Mail
29-05-2025
- Business
- Daily Mail
Hands off our pensions Chancellor! Don't dictate where we put our life savings, says ALEX BRUMMER
The tragedy of British pension funds is that their holdings of UK equities have dwindled to negligible levels. The allocation to UK shares has fallen from some 53 per cent in 1997 to a pathetic 4.4 per cent now. Not only have values on the London Stock Exchange been suppressed but it has also enabled overseas and private equity plunderers to spirit away some of Britain's most promising enterprises such as smart chip pioneer Arm Holdings. Chancellor Rachel Reeves correctly has diagnosed that the biggest pots of savings in Britain are not working in the national interest. She has persuaded 17 of the biggest UK private pension managers to allocate up to £50billion of defined contribution funds to the UK, with infrastructure and start-ups the priorities. In the latest move, designed to replicate the investment success of Canada's public sector union schemes and the Australian superannuation fund, she wants £1.3trillion of scattered defined benefit assets held by local authorities and others to be reorganised into several mega-funds. That could slash costs and make it easier to back UK projects. All fine and dandy – except the Treasury has now disclosed it would seek back-up powers to ensure unlocked money is directed into 'local investment priorities'. The notion of Government dictating where people's life savings are invested would be a horrendous error. It would undermine the fiduciary duty of trustees to secure the best returns and betrays the choices offered by Britain's free market economy. Far better if, instead of thinking Government knows best, Reeves looked at why pension funds are so risk-averse. Over-regulation after the Maxwell pension scandal of 1991 caused managers to favour safe assets, notably Government bonds, over equities. The switch from UK share investment to overseas assets and gilts was exacerbated by Gordon Brown's 1997 raid on the tax break on dividends paid into pension funds. Reeves' priority should be to invigorate UK equities. She could abolish stamp duty on UK share trades, which places British investors at a disadvantage. The Australian, Canadian and US pension funds all have far larger exposure to equities. In America, where equity culture is strong, 54 per cent of pension savings are held in shares. In Australia, some 24 per cent (six times the UK) is invested in local equities. Before these big battalion investors expose themselves to infrastructure and start-ups they should prioritise existing quoted entities. The first objective should be to recreate an equity culture. There is no shortage of private equity, hedge fund, family offices and national wealth funds ready to back infrastructure and start-ups. Branching out Our high street banks could learn from Nationwide. As commercial banks require people to travel ever further for branch services, or to find a working ATM, Debbie Crosbie is pledging to keep a busy branch network intact until at least 2028. The need is particularly important among small traders, the elderly, infirm and technophobes who find navigating online apps frustrating. A one-off payment to members at a cost of £615million will be some compensation to customers who, paradoxically for a mutual, had no say in the takeover of Virgin Money, which makes Nationwide the second-biggest mortgage lender. A 30 per cent rise in profits to £2.3billion, with only a minimal contribution from Virgin, suggests more to come. The jury is still out on the deal, with new write-downs possible. Systems and people integration are far from over. Nationwide's re-entry into business banking, building on Virgin Money's operation, must be a good thing. Smaller enterprises and start-ups need all the help that can be mustered. Intelligent choice The New York Times isn't waiting to see its intellectual property disappear over the horizon in the great AI scam. It has a deal with Amazon where its output will be paired with products and services such as Alexa. Better to be part of the AI revolution, rather than shout from outside the tent. It is a lesson the music industry learned when Spotify invaded.
Daily Mail
23-05-2025
- Business
- Daily Mail
Labour urged to stop bullying over pensions
The boss of one of Britain's biggest stocks and shares platforms has accused Labour of trying to 'bully and cajole' pension funds over where to invest retirement savings. AJ Bell chief executive Michael Summersgill yesterday voiced concerns that Rachel Reeves could instruct pension providers to back unlisted UK equities. Retirement saving funds last week caved in to pressure from the Chancellor to boost their investment in private British businesses and infrastructure projects. Aviva, Legal and General and Phoenix Group were among the 17 firms that vowed to invest 10 per cent of workplace pensions in unlisted assets by 2030 – with 5 per cent of that allocated to the UK. Fears are mounting that Reeves will force pension funds to make the shift if investment continues to lag. Earlier this month the Chancellor said she was 'never going to say never' to such a move. But Summersgill labelled the tactic among ministers to 'bully and cajole' firms as 'crude'. 'It's not the right approach', he said. AJ Bell is not a pension provider in the traditional sense as it does not control money on behalf of clients. But its customers can open a personal pension on the platform and choose their own investments. Summersgill said he was against a mandate, claiming it is 'highly risky to start mandating what people should do with their money – it is very complicated'. Meanwhile, shares in AJ Bell jumped 8.4 per cent, or 38.4p, to 495.6p, after it reported a rise in half-year sales and profits for the six months to March 31. The Manchester-based company has also urged the Chancellor to rule out pension tax changes to avoid speculation ahead of the Budget in October and pressed Reeves to charge forward with Isa reform. AJ Bell wants cash Isas and stocks and shares Isas to be combined into one product. Such a move would 'remove a current barrier which requires people to choose one or the other at the outset,' it said. Reeves faced a backlash at the start of the year amid speculation that she was planning a tax raid on cash Isas, including a potential reduction of the £20,000 tax-free allowance. AJ Bell said half-year profits rose 12 per cent to £68.8m and revenue was up 17 per cent to £153m. It added 51,000 new customers, taking its total to 593,000 – a 9 per cent increase. Assets under management hit a record £90.4billion after growing 5 per cent.
