UK - The Trades Union Congress (TUC) has highlighted the reduction of investment opportunities for pension funds created by the growth of private equity funded takeovers.
It said the rise of private equity was reducing the size of the stock market, as private equity takeovers had risen from 9% of all deals to 25 % in nine years, with UK equity market capitalisation falling by nearly £50bn in the first half of last year.
As a result, Janet Williamson, senior policy officer at the TUC, said: “The stock market has shrunk and we think it is a worrying trend. If this continues the picture may look very different.”
In a submission to the Treasury Select Committee, the TUC said ministers should end the favourable treatment enjoyed by private equity takeovers by introducing new disclosure requirements for private equity owners.
Among its recommendations, the TUC also called for protection for the terms and conditions of employees in takeover targets, and said new requirements should be introduced to inform and consult the workforce in companies subject to private takeovers.
Speaking at the Congress of the European TUC in Seville, TUC general secretary Brendan Barber said: “A new super-rich elite can suck value out of companies without even paying proper UK tax on their windfalls or disclosing what they are doing.”
A number of pension schemes have been prompted to lock in gains with a move into bonds after the estimated deficit across FTSE 100 DB pension schemes improved by £36bn, over the 12 months ending 30 June last year, JLT Employment Benefits found.
HM Treasury has agreed in principle to give NEST a £329m contingent liability guarantee in the event of the master trust's wind up or closure.
AMP Capital has set up a dedicated team to help institutional investors, including pension funds, invest in infrastructure through direct equity allocations.