Pension trustees facing ‘significant barriers’ to Build Back Better plan

Pension trustees and investment managers face "significant barriers" to align their investment strategies with the key pillars of the UK government’s ‘Build Back Better’ plan, according to Canada Life Asset Management.

Its research found that trustees and investment managers cited several barriers, with a lack of capital mentioned by 43 per cent of respondents, ahead of regulatory challenges (41 per cent), limited will to align investment strategies with the plan (39 per cent) and client reluctance (26 per cent).

The Build Back Better plan was initially launched in March 2021 to support economic growth through significant investment.

Despite 31 per cent of pension trustees and investment managers being ‘very familiar’ with the government’s plan and a further 65 per cent being ‘moderately familiar’, a lack of long-term planning and investment opportunities were found to holding back institutional money from contributing to the Build Back Better strategy.

The research also revealed differences in how different areas of the Build Back Better plan were accounted for in short-term (one to three years) and long-term (over five years) investment strategies.

Over two-fifths (41 per cent) of pension trustees and 32 per cent of investment managers had investment strategies focusing on the skills and infrastructure pillars of Build Back Better in the short-term, whereas net zero and opportunities for growth are built into longer-term strategies for 72 per cent and 93 per cent, respectively.

Canada Life Asset Management head of UK property, Michael White, commented: “Since the start of the Covid-19 pandemic the government has made many calls for institutional investors to support the country’s efforts to ‘Build Back Better’.

“While pension trustees and investment managers are familiar with the government’s intentions and many are showing an appetite to align their investment strategies with the key pillars of the Build Back Better plan, they are facing significant barriers.

“This ranges from a lack of long-term planning to limited investment opportunities. If the Build Back Better plan is going to be a success, it is crucial that the industry overcomes these barriers.

“This can only happen if stakeholders across the asset management industry work collaboratively, supported by clarity of policy, to ensure institutional money can be put to good use and create a positive impact for society.”

The latest results from ‘The Role of Institutional Money’ research follow recent findings from Canada Life Asset Management that revealed the way institutional money is put to ‘good use’ is set to be transformed within the next decade.

Institutional respondents view overseas developments (96 per cent) and the regeneration of cities and the highstreets (90 per cent) as potential key areas of investment.

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