Andy Haldane has called for Britons’ pension savings to be invested in UK companies by default, arguing that the government should also review tax relief for pension funds that allocate significant investments overseas.
Haldane, who served as the Bank of England’s Chief Economist between 2014 and 2021 and is now President of the British Chambers of Commerce, has also reportedly been advising former Greater Manchester Mayor Andy Burnham, who is expected to succeed Keir Starmer as Britain’s next prime minister.
He said the proposal is not intended to restrict savers’ investment choices but to address what he believes is an imbalance in how Britain’s large pension savings are allocated, with too much capital flowing into overseas assets rather than supporting domestic businesses.
Similar proposals have previously faced criticism from pension industry experts, who argue that requiring pension funds to invest more heavily in UK assets could reduce diversification, increase investment risk and potentially lower long-term returns for savers.
Critics also contend that the UK’s investment challenges stem from broader structural issues rather than a lack of available pension capital, suggesting reforms should focus on making British companies more attractive to investors.
Haldane also questioned the value of the UK’s annual £60bn tax relief on pensions and other savings, arguing that taxpayers receive limited economic benefit when those incentives ultimately support investment in foreign companies or overseas government bonds.
Britain’s pension system is unusual in the extent to which it invests internationally, providing savers with greater diversification across countries, industries and asset classes while reducing exposure to domestic economic risks.
The comments come as Chancellor Rachel Reeves has already encouraged pension funds to channel more long-term investment into UK infrastructure projects, although her future in government remains uncertain if Andy Burnham becomes prime minister.
