Pension Funds: Use of UK-listed Investment Companies

Baroness Altmann Excerpts

Tuesday 9th September 2025 Lords Chamber

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, the Government recognise the considerable value that UK-listed investment companies bring to the UK, making up 30% of the FTSE 250 and providing crucial funding to high-growth sectors. The Government have not undertaken a specific assessment of the use of UK-listed investment companies by pension funds. However, in November 2024, we published a general analysis of the trends of UK pension fund investment.

[Baroness Altmann (Non-Afl)]

I thank the Minister for that Answer. As he says, UK-listed investment companies are a world-leading, well-established route to investing in illiquid assets such as infrastructure, real estate, energy and life sciences—the very investments that the Government are seeking defined contribution pension investors to invest in to boost British growth. For defined contribution pension funds especially, closed-ended investment companies, which have expert management and offer diversification and daily pricing, seem an ideal way to gain exposure. Can the Minister help me understand, or perhaps write to me to explain, why the Pension Schemes Bill, at page 41 line 26, explicitly rules out using listed closed-ended investment companies to fulfil the Mansion House intent if mandation is required? Will he meet with me and other interested Peers to discuss this apparent error and how to amend or correct it in the Bill?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. I take this opportunity to pay tribute to her expertise and the consistency of her campaigning in this area. I fully understand the points that she is raising and recognise the important role that investment companies play in providing access to private markets. She talked about the recent Mansion House accord. I hope she agrees that the industry is moving in the right direction in diversifying its investments in the Mansion House accord, with 17 of the largest workplace pension providers having voluntarily committed to investing at least 10% of their defined contribution main default funds in private markets by 2030, with at least half of that invested in UK private assets.

I understand the noble Baroness’s concern about the scope of the proposed reserve power in the Bill. The approach that we have taken quite deliberately is to ensure that the powers are suitably targeted and contain guard-rails. They are not intended to be open-ended but should be capable of serving as a backstop to the commitments that pension providers themselves have made through the Mansion House accord and will be used only if we consider that the industry has not made sufficient progress on its own. None the less, I am grateful to the noble Baroness for her constructive engagement on this issue and happy to continue to discuss it with her. As we take the Bill through Parliament, her representations and those of the wider sector will be considered alongside our broader policy objectives. Our aim remains to ensure that the reserve power is effective and proportionate, and delivers for pension savers and for the UK economy.