Making Britain great again risks being a disaster for pensions

While attending the spring meeting of the International Monetary Fund in Washington, British Foreign Secretary Jeremy Hunt once again made the case for directing UK pension funds towards “high-growth UK industries”. It’s a bad idea that hasn’t improved since August 2021, when the government first called the pension funds of the nation to participate in a “ big investment bang.”

Hunt and several captains of industry apparently believe that pension savings represent a large untapped reserve of cash that can be profitably directed towards investment-hungry British companies. The chancellor in particular has his eye on the 550,000 million pounds sterling (690,000 million dollars) managed in the so-called defined contribution (DC) pension plans. Unlike defined benefit (DB) plans, which offer guaranteed income linked to inflation in retirement, savers in CD plans bear all investment risk and enjoy no guarantees of income. As such, DC members cannot afford poor investment returns.