London, 19th November 2025 - A new report from investment systems think-tank, New Capital Consensus, has called on the government to rewire the investment system to reconnect better UK savers’ pension funds to the development of the places they retire in. 

Currently, the report finds, any pension fund invested in indexes like the MSCI Global diverts more of savers’ money towards Amazon than the entire UK economy on any given day. Despite having the second largest pool of investment capital in the OECD, approximately £5.5 trillion, the UK has consistently shown one of the poorest levels of investment in the OECD. 

Savers lose out twice: first, because they don’t get the decent investment returns they deserve,  and second because the places they live and services on which they rely are starved of cash.

Additionally, unable to access the growth capital they need, innovative tech firms are struggling to grow within the UK and are being snapped up by US companies that dominate the field - embodied in the tripling of M&A activity in the UK in the first half of 2024

New Capital Consensus have discovered, in their new report 'Effective Investment', that without redesign from the Government, the current investment system will continue to allocate its £5.5 trillion of investment capital in areas ineffective for the UK economy (including offshoring investment to US tech firms) and doom the UK to anaemic growth despite its position as a global leader in collectivising savings. 

New Capital Consensus identify a number of flaws within the investment chain including that:

• Savers’ money is deployed to seek short-term gain rather than to support the creation of real long-term value by ending up in safe but low-performing assets like bonds and gilts.
  
  

• Asset allocators (like pension fund managers) are ‘herded’ into offshore indexes like the MSCI Global, which allocates more of the UK’s pension savings into Amazon than the whole of the UK economy on any given day.
  
  

• Foreign investors use capital from UK pension funds to buy up growing UK firms, so that we are incapable of producing our own Google or Nvidia.
  
  

• Investment is incentivised towards secondary trading of existing stocks, rather than primary investment which creates new value. 

The report addresses the systemic nature of the problem and provides a number of solutions for Ministers desperate to find productivity wherever they can. Chiefly the use of tax incentives to promote primary investment in UK companies and remove incentives that encourage overreliance on debt over equity and discourage collective burden-sharing. 

They also support enabling and encouraging socially-beneficial strategic allocation of capital by reforming regulatory, accounting and actuarial practices to accommodate healthy long-term risk-bearing that changes the way we manage risk in the investment system. 

This has the potential to regenerate UK stock markets and provide growth capital for innovative UK firms that will drive prosperity in the areas in which retirees live - by incentivising long-term, high-quality risk capital and avoiding the temptation for allocators to opt for low-cost, low-risk options that often divert capital overseas or to ‘ineffective’ areas of the UK economy.

New Capital Consensus also suggest more innovative options for the Government, such as producing rival UK indices to challenge MSCI Global allocation and adopting a proprietary ‘effectivity screen’ across key points in the investment chain enabling regulators to encourage productive behaviours within the system. 

New Capital Consensus’ Director and Co-Author of the report, Ashok Gupta, said: “Solving the UK’s growth and productivity problems requires rewiring of the system especially in how we manage risk and allocate our huge investment pools. 

This can overtime redirect large amounts of investment to addressing levelling up, intergenerational inequality and providing transition finance, benefitting savers in the process.”

Policy Director and Co-Author of the report, Dan Hedley, said: 

“Quite simply, if the Government wants to achieve any number of its missions, it needs to address the investment system at-pace. 

The patchwork nature of the regulatory changes brought about by siloed thinking mean that the current system no longer functions to transmit capital effectively from pension funds to benefit UK businesses, infrastructure or housing goals.  

This Government should adopt our systems-led approach and apply an effectivity screen to monitor the strength of productive behaviours within the system and help to develop policy to achieve the changes our country needs.”

Download the full report here:  DOWNLOAD