A Treasury-backed report sought “expert” advice from Neil Woodford on the suitability of illiquid assets for DC pension schemes.
The government-backed British Business Bank said a 35-year-old investing a lump sum into their pension now could see a 6 to 10% increase in their retirement savings if it was invested in less liquid asset classes. It examined how obstacles to investment in these assets could be overcome.
The report, The future of defined contribution pension schemes, acknowledged “recent market events” but only confirmed in the acknowledgements, on p84 of the report, that Woodford Investment Management had assisted with the report. It listed Woodford among 50 experts interviewed for the feasibility study, which also analysed data on 5,000 funds globally.
In a press release, exchequer secretary to the Treasury Simon Clarke said opening up pension funds to be able to invest in venture capital and growth equity would benefit savers and the economy. “Pensions savers across the UK deserve financial security in retirement, and this review is a helpful contribution to that,” said Clarke.
Philip Hammond announced the study during the 2018 budget, when he was still chancellor.
The study was welcomed by EIS and VCT investors, who said it will increase liquidity for UK start-ups, although pension experts raised concerns about forcing or incentivising pension savers to invest in riskier assets.
In 2016, the government launched the Patient Capital Review, which included Neil Woodford and Miton’s Gervais Williams among its industry panel members. In the 2017 Autumn Budget, the government announced a 10-year action plan to unlock over £20bn to finance growth in innovative firms.
