The most interesting thing of an interesting article by Patrick Hosking in the Times is not that less than 1% of the MP’s contributory scheme is invested in UK equities but that there is literally “no comment” on this from the MPs that are Trustees.
First – the facts. This is a scheme with a high allocation to growth stocks, The Times has gleaned from the scheme’s accounts that 55% of the assets are invested in equities but only £10m of the £772m invested by the Trustees find its way to UK equities.
But only 6 years before , the scheme had £130m in UK equities. There has been a radical sell-off and there must be a reason for this.
Hymans Robertson are the scheme’s investment advisers and likely to highly influential on the asset allocation, but there is nothing from them or the Trustees as to why the sell off.
This is not a political matter . The trustees are politicians but they are not known for strong political views on pensions. The Times tells us
The MPs’ scheme has trustees who are influential figures in both parties, including Harriett Baldwin, the Conservative former chairwoman of the Treasury select committee, and Labour’s Dame Meg Hillier, the former chairwoman of the public accounts committee. The chairman is Sir Brian Donohoe, a former Labour MP.
What comment there is in the article is from Peel Hunt who point out that the lack of UK equities isn’t just a matter of weights in a global equity fund. The scheme’s UK allocation was a mere 2.25 per cent of its total equities pot, while UK stocks account for 3.7 per cent of the MSCI world index.
This is the nub of the story, the trustees seem to have made a conscious investment decision not to invest in the UK and Peel Hunt accuse them of “double standards”.
My view is that whatever the reason not to invest in UK equities, the lack of narrative is a mistake. The last Government was looking to get trustees to voluntarily publish its allocation to the UK markets and explain why the scheme is out of line with typical practice.
In its manifesto this week Labour pledged “to act to increase investment from pension funds in UK markets”
It is unseemly of the Trustees to have no statement to make to the Times. If Rachel Reeves is to create popular support for a national wealth fund, the MP’s scheme, of which she is a member, would be a good place to start.