Question to the HM Treasury:

To ask Her Majesty's Government what plans they have to change the regulation of insurer investment to encourage pension funds and insurers to back capital projects.

The Government wants to see a prudential regulatory regime for insurers that provides a sound foundation for insurance firms to provide long-term capital to the economy, including investment in long-term productive assets. In July 2021 the Government published its response to the Call for Evidence on Solvency II which set out the process by which this will be achieved.

In addition, the Government will shortly introduce new rules to eliminate unnecessary barriers to pension fund investment in long-term assets. This includes: the calculation of the default fund charge cap for automatic enrolment schemes; consolidation measures to be taken by schemes with less than £100m assets under management; and the publication of net returns.

The Treasury, the Bank of England and the Financial Conduct Authority have also convened the Productive Finance Working Group. This industry group has focused on facilitating pension fund investment in long-term assets. This has included work on the creation of the Long-Term Asset Fund structure, the rules for which will soon be finalised by the Financial Conduct Authority.