The industry should be confident that productive finance proposals designed to get DC schemes investing in less liquid assets will happen, unlike some other planned reforms of the pension industry.
Alan Mankikar, senior manager of the Bank of England and head of the secretariat of the working group on productive finance (PFWG) said he “optimistic” proposals would happen.
Talking to the Corporate Adviser Master Trust and GPP conference he said while some pension initiatives had not always driven impactful change, he was “optimistic” this would not be one, given the seniority of those involved in this working group.
He pointed out that the working group included governor of the Bank of England, Andrew Bailey, FCA chief executive Nikhil Rathi and Economic Secretary to the Treasury John Glen. The chancellor Rishi Sunak was also “committed’ to this key policy area, he said.
He says the steering committee, which includes CEOs from some of the most important industry stakeholders has held the working group to account. “Talks have been more constructive than many people might have thought at the outset.”
He adds that the group has not been trying to reinvent the wheel but to build on existing work and find practical solutions.
Manikar says that the PFWK had published its first report earlier this year, which set out the barriers and potential solutions to to encourage greater investment in less liquid assets. This included 13 recommendation for further action, around half of which were for the ‘official sector’ and half for the industry.
Manikar said he was confident on progress being made on the majority of these recommendations by early next year, when the group’s steering committee was due to meet again. He said the steering committee was holding the working group to account “and there was a feeling of people’s feet being held to the fire”.
As the working group moved into phase two he called for those from across the industry to join, as he says PFWG was looking for input and buy-in from a broad slice of the pensions industry.
The group had identified four main barriers that were restricting investments into less liquid assets – as well as recommending potential solutions. These four barriers are: an excess focus on cost rather than long-term value for money, a lack of scale, the challenge of managing liquidity and a need to broaden opportunity to invest in less liquid assets among a wider range of investors.
