Baroness Ros Altmann: I believe the specific exclusion of closed-ended investment companies from possible mandating in the Pension Schemes Bill is a serious error
Baroness Bowles and Baroness Altmann have joined the Association of Investment Companies (AIC) to urge the government to amend the Pension Schemes Bill to include investment companies.
The trio said this would mean that pension schemes would be able to use investment companies to meet any future requirement to invest in private markets.
The call comes after the AIC wrote to pensions minister Torsten Bell in July calling on the government to amend the Bill to include investment companies.
AIC chief executive Richard Stone explained: "The exclusion of investment companies from the Pension Schemes Bill simply does not make sense.
"Investment companies have been investing in private markets for decades and are an excellent way for all investors to get exposure. In addition, they are currently offering the opportunity to invest in assets such as infrastructure, renewables, property and private equity at attractive discounts. Excluding them from the bill will restrict choice and increase costs for pension schemes. We urge the government to amend the bill to put right this evident wrong."
Baroness Altmann added: "Closed-ended investment companies can be an ideal way for pension funds to invest in just the kinds of investments which the government wants them to support.
"The Mansion House reforms want pension funds to invest at least 5% in unlisted companies and productive real assets such as infrastructure, alternative energy, private equity and property. Investment companies can offer expertly managed diversified portfolios of these assets. They can also be safer and better value for long-term pension investors than open-ended structures, which have risks of gating when market liquidity dries up, so I believe their specific exclusion from possible mandating in the Pension Schemes Bill is a serious error, which I hope we can correct as the bill goes through parliament."
Baroness Bowles, a member of the House of Lords Financial Services Regulation Committee, continued: "The bill replicates the Mansion House wording which was agreed by industry and appears to link only to their own products or strategies. It seems anti-competitive for other products which invest in similar assets to be excluded from contributing to the quota.
"Surely, to be fair, the bill should clarify that all investments of similar nature can qualify irrespective of the product wrapper. Listed investment companies have invested more than £100bn in exactly the type of productive private assets that are being targeted by government."
