A growing number of UK pension savers want their money invested in domestic businesses, according to a new study by the Pensions and Lifetime Savings Association (PLSA). The research found that 53% of savers prefer their pension investments to stay in the UK.
The study revealed that 37% of savers would opt for UK-based investments if they delivered similar returns to global alternatives. Meanwhile, 16% prioritise UK investments even if they generate lower returns.
The PLSA highlighted these findings as evidence that UK investments should align with savers’ financial interests while also benefiting the economy.
Balancing Climate Concerns and Financial Returns
The research also examined attitudes toward climate-conscious investments. While 70% of savers are concerned about climate change, their willingness to sacrifice returns for greener investments varies.
- 19% of defined contribution (DC) savers would accept lower returns for environmentally friendly investments.
- 50% might consider it, but only if the impact is significant.
- 31% prioritise financial returns over environmental factors.
Lack of Awareness About Pension Investments
Despite these strong preferences, the study found that many savers lack knowledge about where their pensions are invested:
- 63% of savers are unsure whether their pensions fund UK businesses or infrastructure projects.
- Only 13% are certain their pensions include UK investments, while 24% think they do but aren’t sure.
- Although 74% of savers understand that pension schemes invest their money, only 23% of DC savers and 25% of DB savers know where their funds are allocated.
Additionally, only 37% of DC savers feel confident in selecting their pension investments, while an equal proportion say they lack the knowledge and skills to do so.
Call for Better Financial Literacy
The PLSA stressed the need for improved financial education to help savers make informed investment decisions. PLSA’s Director of Policy and Advocacy, Zoe Alexander, emphasised the role of pension schemes, the government, and employers in shaping UK pension investment strategies.
She stated:
“It’s striking that UK investments are proving to be a preference for many savers. Pension schemes are already thinking hard about how to invest more in the UK in ways that will deliver strong returns.”
Alexander also urged the UK government to support pension schemes by ensuring that suitable UK growth assets are available for investment.
“Employers need to be encouraged to choose schemes that provide the best overall value, rather than just focusing on cost. Some UK investments may be more expensive but offer strong long-term returns.”
By working together, the government, pension providers, and employers can create a system that both benefits savers and strengthens the UK economy.
