LONDON - A consortium of high-ranking executives from leading British companies, including HSBC Holdings Plc (LON:HSBA) and the London Stock Exchange, have urged UK Chancellor Jeremy Hunt to implement prompt pension reforms. The group, which also includes representatives from Abrdn Plc, M&G Plc, GSK Plc, Schroders (LON:SDR) Plc, BP (NYSE:BP) Plc, and J Sainsbury (LON:SBRY) Plc, addressed their concerns through a letter outlining the need for changes that could help enhance economic growth and returns within the UK.
The signatories, such as HSBC's Noel Quinn and LSE's Julia Hoggett, emphasized that the UK is at a pivotal moment where it could significantly improve its economic landscape. They pointed out a persistent underinvestment in domestic businesses despite the presence of strong companies and considerable potential within the country. Over the past 25 years, pension investment in UK equity markets has dramatically declined from 53% to a mere 6% of total assets. This shift represents a withdrawal of approximately £1.9 trillion ($2.4 trillion), with a substantial portion of these funds now being invested internationally.
In their proposal, the executives suggested setting a competitiveness goal for the Financial Reporting Council (FRC). This would require governance regimes to consider how attractive the UK's equity markets are to investors. This move would align with similar changes made to the Financial Conduct Authority and Prudential (LON:PRU) Regulation Authority. The business leaders are hopeful that these reforms will be included in Chancellor Hunt's autumn statement scheduled for November 22.
Additionally, they advocated for further consolidation in defined contribution pension plans. The aim is to ensure that all plan members benefit from diverse investment portfolios that include UK equities. As of today, the Treasury has not publicly responded to these proposals.
The executives' call to action highlights a critical issue facing the UK economy: the need to redirect substantial investments back into domestic businesses to support growth and prosperity. With the chancellor's statement on the horizon, there is anticipation in the business community about potential shifts in policy that could shape the future of UK investments.
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