The economic secretary to the Treasury and City minister, Andrew Griffith has highlighted plans to incentivise Isa saving, as well as a goal of providing “high quality, affordable and suitable financial advice”.
Speaking via prerecorded statement at the PLSA Investment Conference in Edinburgh yesterday (June 6), Griffith said it is important to get more people to save, placing emphasis on Isas, stating they are a “fantastic tool” which have “stood the test of time”.
“We want to see them continue to flourish. In recent years, the number of people taking out an Isa has fallen and research has shown more than half of Britons know what a stocks and shares Isa is,” he said.
“Our aim is to make them [Isas] simpler and more attractive with strength and incentive to save and invest”.
According to data from the Bank of England, £9bn was invested in Isas in April.
Griffith also highlighted government plans to allow more people to receive “high quality, affordable and suitable financial advice at their convenience, as well as free access to financial guidance when they need it”.
Reiterating that, with the Edinburgh reforms, the government is working with the FCA to “examine the boundary between regulated financial advice and financial guidance, with the objective of improving access to advice”.
Illiquid assets
The minister also highlighted government plans of allowing defined contribution schemes to invest into more illiquid assets “such as key infrastructure or growth capital”.
He explained that this is being done to “level the playing field” by making DC schemes competitive with other institutional investors.
Griffith said that “there is no single idea of directing people’s capital for them”.
Rachel Brothwood, executive director of pensions at the West Midlands Pension Fund Rachel Brothwood, said: "There has to be a case for pension funds to invest. The returns and risks have to stack up.”
Meanwhile, Railpen’s chief executive, John Chilman argued UK schemes already have an “overweight to the UK”.
Chilman said: “There is a big difference between the bigger schemes with higher governance that might be able to invest more in illiquids and the smaller schemes that want a little bit more vanilla because that's their bandwidth."
He added that “most big schemes have been investing in these sort of things for many years” - so long as it is a good investment.
Mandation of investment, whether by geography or asset class, is something that worried Liz Fernando, chief investment officer of Nest.
“I generally think you should let market forces play out and trust that investors will choose the best risk and return opportunities," Fernando said.
"If those are in the UK that is absolutely fantastic, we absolutely don’t discriminate against the UK, we don't say we’ll avoid the UK but we don't favour the UK either.
“If the opportunities are there with the return profile, then we will put assets to work here."
While Griffith understands some may be nervous to make riskier decisions with their pension pot, he argued that the government wants to “celebrate successful risk takers”.
