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‘Central system would flood the stockmarket’

A centralised pension investment scheme could flood the UK stockmarket with cash and artificially inflate share prices.

Hargreaves Lansdown head of research Mark Dampier says a centralised scheme pouring money into the UK stockmarket will have a similar impact to trackers in the late 1990s, resulting in large-cap stock valuations soaring through pressure of demand.

Dampier says: “If money is invested centrally, it is effectively going to be a tracker because the Government is not going to take the active route. The trouble with trackers is that a massive amount of money goes into very few stocks. In the late 1990s, we saw valuation anomalies in the top 100 as a result.”

ABI director of life and pensions Chris Kenny says the life and pension industry is structured to offer competitive choice to consumers, allowing cash to flow across all areas of the economy such as equities and bonds. He is concerned that a central agency running very big funds would control a massive proportion of the economy, distorting the macro picture.

Kenny says: “I would urge the Government to pursue a model that does not suppress choice. If you try to do it via a great new central system, the impact on the macro economy of six or seven very big funds is unpredictable.”


Leeds Building Society launches 1 year fixed rate bond

Leeds Building Society has launched a one year fixed rate bond paying 4.8 per cent until 1 February 2007.The product, with a minimum investment of 5,000, also offers a monthly interest option. Unusually for this type of product, access is available on up to 50 per cent of the amount invested without notice or penalty, […]

The simple truth

If a pension gap exists in the UK – and Informed Choice managing director Nick Bamford suggests it may not – then he says simplification fails to tackle the real problems

Pressure is growing over spring deadline

The Government faces a tight self-imposed deadline of next spring to respond formally to Turner and is coming under strong pressure from the opposition to stick to its timetable. Work and Pensions Secretary John Hutton told the House of Commons that the Government welcomes the broad framework of the report and insists it has ruled […]

Isle of Man Finance to open City office

Isle of Man Treasury, in collaboration with Isle of Man Finance is opening its first-ever off-island office space in the City.The new office at 1 Cornhill will be used as a base of operations for the island’s finance and business community and to encourage stronger links with the City and therefore Europe.The operation will be […]

Is three a crowd?

The pension versus Isa debate has raged on and off for years. Les Cameron, head of technical at Prudential, asks if three’s a crowd.   I think the debate was arguably settled by pensions freedom when the biggest downside of pensions – limited access and poor death benefits – was fundamentally changed. Total access, albeit with […]


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