Industry figures have continued to express concern about the government’s proposed reserve asset allocation powers, warning that they risk harming savers’ outcomes and distracting from the real barriers to domestic investment.

Speaking on a panel at the ABI Annual Conference, senior figures from across insurance, asset management and public policy questioned whether mandation was either necessary or appropriate, given trustees’ and providers’ fiduciary duties to members.

M&G Life Insurance chief executive, Clive Bolton, noted that mandation would represent a significant step change in government involvement in how pension savings are invested.

“I don’t think mandation is needed as the obstacles are elsewhere,” he stated.

“But if we go down that route, what we have to accept is that it’s affecting people’s money, and therefore that is a piece of government direction.

“It’s not something they can do without the upsides and downsides in terms of people’s pots, and I’m not sure this is something we’ve covered enough in the debate yet.”

Meanwhile, IFM Investors chief strategy officer, Luba Nikulina, pointed to international examples where high levels of domestic investment had been achieved without compulsion.

“The intention of mandation is an interesting signal from the government that it wants UK savers and pension funds to invest in the UK.

“In Australia, almost 50 per cent of Australian superannuation assets are invested in the local economy, because the enabling environment is there, not because the government mandates it.

“I would argue with the enablers in the Pension Schemes Bill, the government is already shifting the pendulum, without having the need to go to the extreme of mandating investment.”

Going further, Legal & General retail chief executive, Laura Mason, warned that any form of mandated investment risked encroaching on the industry's core responsibility to savers.

“We are here to make sure savers get the best returns they possibly can,” she argued.

“Any form of mandation, where you push people into certain types of investment, goes against that principle.”

From a policy perspective, Office for Investment senior investment adviser, Mark Nichols, stressed that the government's focus would be on promoting the UK as an attractive destination for capital, before considering forcing domestic schemes to allocate locally.

“Canadian and Australian pension funds have been benefitting from investments in the UK for years, and UK investors have not been benefitting,” he said.

“So, are we getting the message out there enough that the UK is a great place to invest?

“Before we get to the point of mandation, this is what we need to be focusing on, and the government is committed to doing this."

Despite backlash to the proposed reserve power in the Pension Schemes Bill, Pensions Minister, Torsten Bell, has previously insisted that the industry should “chillax” and maintained that the power was intended only to ensure the industry meets the commitments it has made, such as the Mansion House Accord, not to interfere with trustees’ fiduciary duties.

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