The British public would prefer pension funds to prioritise delivering strong returns for savers rather than being compelled to invest in UK assets, new polling has suggested.

The survey, conducted by More in Common, found that almost twice as many respondents supported a focus on maximising performance within the £400bn Local Government Pension Scheme (LGPS) as backing mandated domestic investment.

The findings come amid ongoing debate over provisions in the Pension Schemes Bill that would grant the government a “reserve power” to require certain pension schemes to allocate a minimum portion of assets to UK investments.

Ministers recently opted to retain this power despite the House of Lords voting to remove it in March.

The polling also follows proposals from Reform UK to consolidate the LGPS into a sovereign wealth fund focused on domestic investment.

The party’s deputy leader, Richard Tice MP, previously said the move would allow pension capital to “patriotically” support British businesses.

However, the survey results indicated limited public appetite for such an approach.

When asked which statement best reflected their view, 40 per cent of respondents said LGPS funds should focus primarily on achieving the best returns for pension savers, rather than prioritising UK investment.

In contrast, just 23 per cent said funds should prioritise domestic investment even if it may result in lower returns, while 37 per cent said they did not know.

Support for prioritising returns was strongest among Liberal Democrat voters (54 per cent), followed by Reform UK voters (51 per cent), Conservative voters (49 per cent), Labour voters (45 per cent) and Green voters (35 per cent).

Commenting on the findings, UK Sustainable Investment and Finance Association (UKSIF) chief executive, James Alexander, said the results highlighted a clear preference among savers for performance-led investment strategies.

“This survey shows that British savers want decisions about their pensions to focus on secure, long-term growth, not political priorities,” he stated.

Alexander warned that mandating UK investment could have unintended consequences, including directing capital into overvalued assets and distorting markets.

“Forcing pension schemes to invest in the UK risks pushing capital into overvalued assets and distorting markets.

"This could harm pension performance at a time when retirees are already seeing their living standards fall due to inadequate savings,” he added.

He also emphasised the importance of allowing investment professionals to allocate capital effectively over the long term.

“Finance experts, who manage capital over decades, need to be trusted to invest savings responsibly, balancing strong returns with emerging risks and opportunities,” Alexander continued.

“Policymakers should be focusing their efforts on building a strong pipeline of UK investment opportunities in fast-scaling sectors, such as clean energy, so that pension capital can be deployed where it drives the most growth across the wider economy."

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