Souter criticises pensions industry

Transport tycoon Sir Brian Souter has criticised the “pessimism” of the pensions industry, insisting a switch away from investing in businesses to putting money into gilts and bonds has created an “ever-increasing cycle of unaffordable funding”.

The chairman and cofounder of Stagecoach criticised funds for their “lack of faith in investing in our youth”.

With returns on investments in gilts diminishing – to the point where Sir Brian said it was expected some of these investments would lose money – the entrepreneur said it was now time to look again at the investment approach taken by many pensions schemes.

Pension funds can be “important pots” of money but he claimed these are “not being efficiently invested in ways that encourage enterprise and employment”.

Sir Brian, who is the president of accountancy body Icas, made the comments in an article in the group’s CA magazine.

He stated: “You might expect our pension schemes to be investing heavily in businesses and growth for the future, but they’re not.

“There is growing acceptance that these fabulously large and important pots of defined benefit investment assets are ... not being efficiently invested in ways that encourage enterprise and employment.”

He claimed “baby boomers may find themselves being accused of pulling up the drawbridge, denying the young access to the good pensions they devised for themselves”.

Sir Brian Souter.