The Chancellor Jeremy Hunt has suggested the pension system needs reform to ensure people receive higher returns.
Hunt said he is concerned that pensioners are not getting “the returns that they could expect”, according to the Daily Telegraph.
The Chancellor was speaking in Washington where he is attending the spring meeting of the International Monetary Fund with other finance ministers.
The Telegraph reported the Chancellor as saying that Britain’s pensions industry is in need of “big reform” and could take inspiration from other countries which allow pension funds to seek higher returns, but which potentially take on more risk.
He said: “Countries like Australia and Canada have found a way of making sure that they get better returns by consolidating their pension fund industry in a way that makes it easier for them to invest in unlisted and potentially higher growth vehicles and that’s the thing I think needs to be worked on.”
Jeremy Hunt reportedly said that Sir Jonathan Symonds, non-executive chairman of GlaxoSmithKline, is providing informal advice on how to get higher returns on money invested in defined contribution pension schemes.
The schemes will provide the “biggest opportunities to unlock investment in to high-growth British industries”, Mr Hunt reportedly said.
Sir Jonathan will join the Chancellor’s council of economic advisers alongside four other economists, where he will provide advice on pensions on an ongoing basis, the Telegraph reported.
Asked if pension schemes should be forced to invest in the stock market as opposed to lower risk bonds, Mr Hunt reportedly said: “It’s not something I would instinctively be comfortable with, because I think one of the strengths of the City is that we give financial institutions complete freedom to invest where they think they will get the best returns for the people whose money they’re looking after.
“But we’re looking at all these issues. My concern is that pensioners and future pensioners are not getting the returns that they could expect.”
The Chancellor used his spring Budget to abolish the tax-free limit on pensions savings, which had stood at £1.07 million.
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