UK government makes proposition for pension fund investments

The fee limit that protects retirement savers in the UK from high charges could be eased further under new proposals designed to prompt pension funds to invest billions into unlisted assets, such as private equity.

The new government initiative would enable what it refers to as “well-designed performance fees”, which are usually levied via venture capital managers and private equity, to be excluded from the fee cap on workplace pensions, according to a proposal viewed by the Financial Times.

At present, these fees are included in a 0.75 percent yearly cap on charges for any workers who are auto-enrolled in workplace pension schemes, commonly referred to as defined contribution plans. However, it is rare for trustees to be invested in assets charging such fees due to a wide range of concerns, such as volatility and cost transparency.

Those saving for the future in need of guidance regarding retirement planning in Chester, Manchester and other UK cities sometimes look to wealth management experts for advice. Along with portfolio management and financial advice, they also help their clients with estate and retirement planning strategies.

Ministers this year have stated that reforms are required to empower trustees to invest in illiquid sectors, where it is considered more difficult to sell and buy assets.

The current consultation comes as the UK Chancellor Rishi Sunak is seeking new ways to access billions of pounds’ worth of pension fund cash in order to make investments in long-term projects and support the government’s pledge to aid economic growth across the country.

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