Aviva CEO Mrs. Amanda Blanc warned that the government's power to force pension funds to invest in UK assets would be a serious mistake, describing it as “a sledgehammer to crack the nuts”.
Speaking on Thursday, Blanc insisted that the determined donation pension must be invested in the best interests of individual savers and that any effort to force the plan to allocate capital to specific UK assets could undermine that principle.
Her comments come as tensions rise on luxury home agreements between the Treasury and the pension industry, a voluntary agreement signed this week by the UK's 17 largest workplace pension providers, including Aviva, Legal & General & General & General, Aeegon and Phoenix.
Under the agreement, providers are committed to allocating at least 10% of default pension funds to the private market by 2030, with half (£25 billion) going to be invested in UK assets such as infrastructure, startups and other private investments.
While the Treasury estimates that it could generate a new investment of £50 billion, an upcoming review proposal has emerged, and if the provider fails to achieve its goals, it may recommend that the government have the authority to authorize the allocation of assets.
Blank firmly delayed the proposal: “We don't believe that empowerment is the right thing to do. The government needs to consider unexpected consequences. There is a group of people – employee welfare consultants, employees, workers, they need to change their behavior, not just pension funds.”
“It's like a sledgehammer breaking the nut. You have to be able to get everyone on the right thing.”
The warning stressed that in the pension industry, government intervention may conflict with the trustee’s fiduciary obligations, which could force them to make investment decisions that are not in the best interests of plan members.
While Prime Minister Rachel Reeves said she did not think the authorization was necessary, she obviously refused to exclude the rule and told reporters earlier this week: “I will never say it will never say it, but I don't think it is necessary.”
This ambiguity has sparked backlash from several key signatories to luxury home agreements, including Royal London, Ain and Mercer, who believe pension funds must retain autonomy to invest in ways that best serve savers.
Under the voluntary plan, pension funds make it clear that their commitments are conditional – the subject is fiduciary obligations and rely on government and regulatory actions to remove barriers to private market investment.
The debate is underway as the government seeks to mobilize long-term domestic capital to drive economic growth and support national priorities. But industry leaders warn that undermining pension funds’ independence could backfire.
Blanc commented as Aviva reported strong first-quarter transactions, with general insurance premiums up 9% year-on-year to £2.9 billion. The company is currently in the process of direct acquisition of £3.7 billion, and the Competition and Markets Authority confirmed it has conducted a preliminary investigation. Blank said the investigation was expected and would not delay the deal, which is scheduled to close mid-year.
When the Treasury prepares to publish its pension investment reviews, Blank's comments may have an impact on shaping the debate and may increase pressure on the government to avoid making investments in UK assets a legal requirement.
