Dear Editors,

I enjoyed listening to Iain Martin and Maggie Pagano’s discussion on UK pension fund investment on the last podcast.

I have been a trustee of a local Government pension fund for over 20 years and would make the following observations:

Mark to market volatility was a key factor behind the shift to derisking and fixed income based investment strategies. However, as the vast majority of corporate DB schemes are now closed and heading for buyout, it’s inconceivable that they will increase their allocation to UK or global equities in any material way. A more relevant question is why individual DC scheme members are choosing not to invest more into UK equities?

A large part of the answer is the opportunity to invest across global markets, not just equities but also via alternatives such as private equity, infrastructure and real estate, and high yield debt. Many of these products were not available a generation ago. Local government funds, which are some of the few remaining open DB schemes, have mostly diversified from their traditional holdings of 25% Gilts, 75% UK and global equities into a much broader asset allocation. As these funds now mostly have large surpluses, they are increasingly looking to de-risk.

Fund trustees must also prioritise their fiduciary responsibility to ensure liabilities can be met. 
In this context, the government’s challenge is that it’s less than compelling to overweight holdings in UK equities.

Yours sincerely,

Michael Adam

Don’t reach too much into the Rutherglen by-election

Dear Editors,

I’m slightly amused by the hysterical and incompetent reporting of the Rutherglen by-election. Both national and Scottish media are innumerate and don’t understand the dynamics and psychology of by-elections.

This result was very largely due to a very low turnout (37.2%). There was no Labour landslide and they would be very ill-advised to read too much into the numbers. The Labour vote actually fell, but all the other parties fell even more – voters stayed home rather than voting for them, it was a negative not a positive trend. The SNP vote was little more than 1/3 of the previous election.

So while I do agree that the SNP bubble may be bursting, I would counsel a bit more caution over that.  A year is a long time in politics…

John Kanefsky

Britain should be a direct democracy 

Dear Editors,

Gerald Warner’s article about the ruinous HS2 fiasco highlights the appalling decision makers involved in Government-funded projects. There are two ways of tackling the issue, namely to try to improve the existing process (which in my view will take forever and almost certainly won’t succeed) or develop a new approach for exercising democracy in the UK.

At present, the UK is a representative democracy, with representatives (ie MPs) generally having no experience of ‘getting complex things done’ let alone of making the all important initial decision regarding what should be done. The established alternative to representative democracy is direct democracy, which digital technology makes an increasingly viable alternative – its practicality is evidenced by, for example, Switzerland operating a direct democratic process.

HS2 provides excellent evidence of why the UK should change to being a direct democracy.

Regards,

Charles Breese

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