Plans to compel UK pension funds to allocate more capital to domestic private markets could damage long-term retirement savings and shake investor trust, says Nigel Green, CEO of deVere Group.
Reports suggest the UK Treasury is drafting a policy requiring pension schemes to invest up to 10% of assets in private markets, with at least half directed to UK-based opportunities. Green cautions that forcing funds into politically guided investments risks lower returns and could compromise the fiduciary duty to pension holders.
There are also warnings that if firms do not voluntarily comply, the government may legislate to enforce the move.
“This is a dangerous and misguided policy for retirees,” says Nigel Green. “The purpose of a pension fund is to grow wealth for savers over the long term.
“That means investing wherever the most compelling returns are likely to be found— and not according to government diktats designed to patch over domestic political pressures.”
The plan, being championed by Chancellor Rachel Reeves, is being presented as a way to stimulate UK growth and revitalise domestic capital markets. But critics argue it undermines the principle of fiduciary duty and exposes savers to unnecessary concentration risk.
“Forcing pension funds to tilt portfolios toward one geography regardless of market conditions could distort asset allocation, reduce diversification, and expose millions of future retirees to lower performance,” warns Nigel Green.
“It’s not the job of pension managers to carry the weight of industrial policy.”
He continues: “If UK firms are being overlooked, there’s a reason for it. The solution isn’t to coerce capital into local markets. The solution is to make those markets perform better,” he says.
Nigel Green also warns that trust in long-term saving could suffer as a result of the proposed changes.
“People expect their pension contributions to be professionally managed in their best interests—not treated as a national piggy bank.
“This risks creating deep scepticism among savers who are already facing significant pressures planning for retirement.”
The debate over how to boost UK investment is timely and important, but Nigel Green insists that pension pots should not be turned into instruments of short-term policymaking.
“There’s a clear line between encouraging investment and forcing it,” he says.
“Crossing that line sends the wrong signal to global markets. It also opens the door to future governments feeling entitled to dictate terms on how private savings are deployed.”
The UK has one of the world’s largest pension sectors, with hundreds of billions in assets under management. According to Nigel Green, this size and influence should be respected, not harnessed through coercion.
“Strong, independent pension funds are a cornerstone of long-term financial security,” he concludes.
“Undermining that strength weakens the whole savings system. It would be a short-sighted gamble that comes at the expense of those who’ve spent decades preparing for retirement.”
