Pensions chief’s warning after Labour proposals

THE boss of investment giant Schroders has warned against meddling following a Labour backed proposal that could lead to pension funds being told how they must spend billions of pounds.

Chief executive Peter Harrison said fund managers should not be ‘inhibited’ in how they select investments on behalf of retirement fund savers.

The comments come amid signs of a backlash among some in the City over plans – supported by shadow chancellor Rachel Reeves – for a £50billion Future Growth Fund. It could see defined contribution pension schemes divert 5 per cent of their assets into it.

Ms Reeves has said she is open to the idea but believes fundraising goals could be met on a voluntary basis. One industry figure has described it as a ‘slippery slope’.

And Yvonne Braun, director of long-term savings policy at industry body the Association of British Insurers, said that while it welcomed the focus on unlocking the power of savings to boost growth, savers’ interests should be ‘at the heart of investment decisions’.

A key concern is that fund managers should act in line with their fiduciary duty, rather than be influenced by other reasons to invest.

Mr Harrison, said that ‘we need a change in our whole investment culture’ to spare Britain from falling behind globally.

He did not comment directly on Labour’s plans but he said of pension savers: ‘We need to ensure their pension managers are not inhibited in selecting these investments on their behalf.’

The Future Growth Fund plan has drawn mixed responses.

Aviva chief executive Amanda Blanc said: ‘We do not feel that creating a complex and bureaucratic fund... is the right way forward at all.’