Don’t hand pensions to non-public fairness corporations, warns Royal London

Ploughing savers’ money into British infrastructure and private equity risks undermining the primary role of pensions, a major mutual insurer has warned.

Barry O’Dwyer, chief executive of Royal London, said he is ‘nervous’ about Labour’s proposal to shake-up the pensions industry.

The Pension Schemes Bill is seeking to boost returns for millions of retired people by encouraging schemes to put more money into British infrastructure and private companies.

‘I do get slightly nervous about someone else dictating how money is invested,’ O’Dwyer said.

‘With an estimated £3trillion in UK pensions, it is understandable pensions are viewed as able to play a powerful role in supporting UK economic growth. However, the primary role of pensions is to fund customers’ retirement.’ 

Risk: The Pension Schemes Bill is seeking to boost returns for millions of retired people

Royal London, which has more than 2m pension customers, did not sign up to the previous government’s Mansion House Compact, a commitment to allocate at least 5 per cent of default pensions pots into unlisted shares by 2030.

It has won support from providers such as Aviva, Legal & General and Scottish Widows but Royal London felt it wouldn’t be in the best interests of customers.

The mutual, which is owned by its customers, manages some £169billion of savings.

Life insurer Phoenix Group and fund manager Schroders this week agreed to launch an investment manager to promote the compact and funnel £20billion of pension cash into private markets.