Government threatens ‘action’ to ensure pension funds invest in new nuclear power stations

Earlier UAE, Abu Dhabi and Saudi Arabia were being invited to invest in Sizewell C and the British government is now turning to British pension funds.

An FT report notes that ministers are showing signs of “losing patience with pension funds over low levels of investment in domestic listed and unlisted markets”

The Pensions Regulator’s new guidance, encouraging pension funds to invest 5% in unlisted assets, adds significant risk (Ros Altmann).

In a speech this week, Bim Afolami, City minister (left), said “We have a challenge with pension funds.” He said if there was “no improvement” in levels of investment in the UK by pension funds then the government would “consider what further action can be taken”.

Ros Altmann points out that in the last 15 or 20 years, UK pension funds have dramatically reduced their exposure to UK markets and Afolami notes that “UK pension fund holdings in UK listed equities have fallen – from 53% in 1997 to around just 6%”.

The Financial Times reported last year that the British government had stated its intention to consult on reforms that would make nuclear a more attractive investment for UK pension funds, paving the way for nuclear power to be classified as “environmentally sustainable” under the UK’s upcoming “green taxonomy” – but has not yet started to do so as the World Nuclear News explains.

The government wants large pension funds to invest in the Sizewell C nuclear project in Suffolk and called several town hall pension funds, managing more than £100bn in assets between them, to a meeting with the Chancellor Jeremy Hunt on May 16^th, where the role of large retirement plans as potential investors in the Sizewell C nuclear project in Suffolk was discussed.

Local authority pension funds, managing hundreds of billions of pounds, told Jeremy Hunt that returns from new nuclear power plants need to be “compelling” to attract their cash.

After the government’s March ‘pension reforms’, what further action will an increasingly desperate ministry contemplate? And how will UNISON, their union, respond?

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