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(Bloomberg) -- UK pension funds should invest more than 5% of their assets at home, according to Amanda Blanc, chief executive officer Aviva Plc, as the government piles pressure on managers to commit more to domestic investments.
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“It would be great for it to be more,” Blanc said in a Bloomberg television interview Tuesday. “But I think it’s a really good starting point.”
Her comments come as UK pensions minister Torsten Bell has floated a voluntary 10% allocation to listed and unlisted British equities as the government pushes for more domestic investment, Bloomberg News reported earlier this month. The discussions are gathering pace as an announcement on the “Mansion House Compact 2” is scheduled for late June or early July.
The latest proposals include an allocation of as much as 10% to alternative assets, of which half must be in the UK and half in private companies. Aviva, one of the UK’s largest insurers, is among eleven companies that signed up to a 2023 commitment to invest 5% of defined-contribution pension funds in unlisted equities by 2030, though a proposal for a specific UK allocation was dropped.
Private assets should be available to retail investors through their pension plans as those investments will make more money over the long-term, Blanc said.
“Today, 12.5 million savers in the UK will not have enough money to retire on,” she said. “That is largely because their auto-enroll pension is invested in default funds, which all focus on costs and not value.”
Getting more investments into private assets and the UK “requires a real change in capability and mindset” of the pensions industry, Blanc added.
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