Pension Investments

Debate between Baroness Vere of Norbiton and Lord Drayson

Tuesday 23rd January 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

There are two things about that question. First, having a very large number of pension pots under £1,000—I believe that there are now 4 million—is not a good way to manage pensions. We need to make sure that we can consolidate those into much larger schemes that can diversify their investments much better. However, the UK has a very poor record on pensions investing in unlisted securities, running at about 0.5% of pension pots. In Australia, the figure is 4.9% and in Canada, although it is not directly comparable, it is over 15%. Just because something is unlisted and illiquid does not mean that it cannot offer good returns over the long term.

[Lord Drayson (Lab)]

My Lords, I direct the House to my entry in the register of interests. Investment funds have flowed out of listed UK equities for the past 30 consecutive months. When is this going to stop?

[Baroness Vere of Norbiton (Con)]

The Chancellor and indeed the Government have put forward a number of reforms to ensure that we make the UK the best place not only to raise capital but to invest pensions in future. As I am sure the noble Lord has seen, we have been delivering on the recommendations of the noble Lord, Lord Hill, for overhauling the UK’s prospectus regime, we have been looking at the recommendations of Rachel Kent’s investment research review and we have been developing a new type of trading venue that will act as a bridge between private and public markets. We can be innovative, but this is a process of evolution not revolution.