Reforms to Britain’s pension system could lead to billions of pounds being diverted from pension funds to high-growth companies in the near future and invested in riskier investments, reports the British business newspaper the Financial Times.
Treasury Secretary Jeremy Hunt is expected to announce regulatory changes next month to encourage pension funds to make these riskier, but potentially more profitable investments. The business daily relies on unnamed sources surrounding the case.
Retirement Programs
Hunt is looking into another proposal from consultants at the Tony Blair Institute to bring public and private sector pension schemes into funds that invest in start-ups, infrastructure and other high-growth companies in the UK. The proposals aim to boost returns for UK retirees and secure funding for new businesses.
The pension system in the Netherlands is also undergoing an overhaul, with employees saving more into their old age via individual funds. It is also the intention that pensions move more with the fund’s investment results. As a result, pensions can be increased more rapidly in good economic years but also reduced more quickly in bad economic years. Opponents denounce the changes, in part because it becomes uncertain what retirees will ultimately receive in retirement.
Source: BNR
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