Lord Mayor Advocates for FTSE Pension Funds to Invest in British Infrastructure

The largest corporations in Britain are being called upon to endorse an initiative led by the Lord Mayor of the City of London, Alastair King, aimed at channeling their pension funds into infrastructure projects and AIM-listed stocks to stimulate economic growth.

In his latest effort to reform the pension fund sector, King has contacted the chief executives of FTSE 100 companies and significant employers to garner support for an “employer pension pledge.”

King, who serves as a ceremonial leader within the City of London Corporation, is advocating for pension funds to assess the “value for money” of their investments rather than solely focusing on investment costs. This shift could prompt funds to reconsider their reliance on inexpensive index-tracking options, potentially leading to increased investments in infrastructure initiatives and entities on London’s junior market.

This initiative builds on the recent Mansion House Accord, which was endorsed by 17 prominent pension fund providers last month, committing them to invest 10 percent of their assets in private markets by 2030, with half allocated to the UK. King aims to secure sufficient support for his new proposal in advance of the Chancellor’s upcoming speech at the Mansion House, where Rachel Reeves will present her vision for the City.

A representative from the City of London Corporation noted: “The Lord Mayor is actively engaging with major employers to garner their backing for improved retirement outcomes for workers across the UK.”

The backdrop to this call to action includes governmental efforts to reform the pensions sector, highlighted by a bill released last week that lays out various measures designed to encourage increased investment in infrastructure projects.

Concerns have emerged regarding the proposal that would allow sponsors of defined benefit pension schemes—many of which no longer accept new members and are linked to final salaries—to withdraw their surplus funds.

The Pension Security Alliance, a coalition of businesses, advocacy groups, and pension experts, has expressed alarm, citing the government’s own impact assessment which cautions that members may not receive their full pension upon retirement. The group, which includes organizations like the Pension Insurance Corporation and Just Group, remarked on the troubling revelation that civil servants informed ministers that if the plans proceed, certain pension schemes may not fulfill their obligations to provide retirement benefits.

A government spokesperson stated: “There are substantial surpluses currently available in private-sector defined-benefit pension schemes, with three-quarters of these schemes in their most robust funding position in decades. Our proposed changes aim to unlock resources to foster economic growth and remove obstacles to progress, benefiting both workers and businesses through the potential of these assets.”