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Lloyds Bank has snubbed Rachel Reeves’s push to get pension funds to invest more in the UK, dealing a blow to the Chancellor’s bid to boost growth.
The lender’s pension arm Scottish Widows has refused to sign up to a pact that will see Britain’s largest retirement funds invest £50bn in infrastructure, property and private equity by the end of the decade – half of which will be in the UK.
The Telegraph first revealed details of the updated agreement last month, known as the Mansion House Accord.
The deal will see 17 workplace pension providers invest 10pc of their defined contribution pension schemes in private assets, in a radical attempt to kickstart the economy.
It comes after the Treasury spent months pressuring investment companies to invest more in home-grown projects, with ministers at one point calling for up to 10pc invested in the UK alone.
The original Mansion House agreement, spearheaded in 2023 by Ms Reeves’s predecessor Jeremy Hunt, aimed to boost growth by pledging a minimum 5pc of workplace pension savings into privately-owned companies by 2030.
In a thinly veiled jibe at the Government’s plans, Chirantan Barua, Scottish Widows’ chief executive, said that the need to buy British assets was the primary reason it refused to sign the updated accord.
Mr Barua boasted that his division, which manages more than £100bn of workplace pension assets, is already heavily invested in the UK, but insisted that future investment decisions would be guided solely by returns instead of geography.
“We will continue this investment approach to support our communities where it generates strong returns for pensioners,” he said.
Scottish Widows had been one of the biggest workplace pension funds to sign the first Mansion House accord.
As an arm of Lloyds, Britain’s largest domestic bank, Scottish Widows has 10m retirement and savings customers.
The group, founded in 1815, is best known for its iconic widow character dressed in a black hood and cape who has appeared in adverts since the 1980s.
‘Flat-out no from the start’
Sources said Scottish Widows was among a handful of original signatories – including Aegon, Aviva, L&G, Nest and Standard Life-owner Phoenix – which had raised concerns about the rewriting of the original pact.
Some pension providers were reluctant to specify a UK target within the broader 10pc commitment, though others were prepared to go further and commit as much as 15pc of savers’ cash to private markets.
“[Scottish Widows] were almost a flat-out no from the start,” said one City source.
Other sources suggested two of the signatories to the updated pact told the Treasury that going above 10pc invested in private markets was a “red line”.