AIC calls out “frustrating” lack of progress on Pension Schemes Bill

The Association of Investment Companies (AIC) has expressed disappointment that the government has not taken the opportunity to amend the Pension Schemes Bill in the House of Commons to include investment companies.

The Bill will give the government powers to compel pension schemes to invest a percentage of their portfolios in private assets. In the legislation as currently drafted, pension schemes would not be able to meet this requirement by investing in listed investment companies that hold private assets. The AIC does not advocate pension funds being compelled to invest in private assets, but given that the government is seeking such powers, the AIC argues that investment companies should be one of the options available.

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “It is very frustrating that the government did not amend the Pension Schemes Bill when it passed through the House of Commons. For pension savers to achieve the best outcome, we need a competitive market which includes the widest choice of investments, and this includes investment companies. Choice ensures pension schemes can invest in the most appropriate private assets for their savers by weighing up performance, costs, liquidity and risks. Excluding investment companies would be bad for competition, resulting in higher costs and a lower quality offering for pension savers.

“We are urging the government to amend the Pensions Schemes Bill as it passes through the House of Lords. Investment companies are a tried and tested way for all investors, including pension schemes, to access private assets. Investment companies have invested over £110 billion in private assets such as infrastructure, renewables, property, venture capital and private companies – all providing vital capital and helping support UK growth.”

Letter to Treasury minister in July

In July the Association of Investment Companies (AIC) wrote to Treasury minister Torsten Bell MP to urge the government to amend the Pension Schemes Bill. The AIC explained in its letter why listed investment companies that invest in private assets should be included as suitable investments for pension schemes to meet any requirement to invest in private assets.