From Pensions to Prosperity

This pamphlet by Dr. Joe Zammit-Lucia, Co-Founder of NCC Partners Radix Big Tent, reframes the role of pension funds, arguing that no UK government can deliver sustained prosperity without effectively mobilising the nation's massive pool of retirement savings for productive domestic investment. Currently, the UK pension system has been severely degraded by financialisation to the point where it acts merely as a financial service focused on accounting for money, ignoring its broader macroeconomic responsibilities. The transition from Defined Benefit (DB) to Defined Contribution (DC) schemes highlights this failure, as DC schemes operate essentially as standard savings accounts that transfer all performance risk to the members who are least equipped to bear it.

Through a strict financial lens, pension funds are viewed as giant piggy banks that consume tax-subsidised money to generate financial returns. However, this narrow focus is misguided because pensioners ultimately care about their quality of life and access to goods and services (like healthcare and transport) rather than just monetary figures. Currently, the investment behaviours of UK pension funds are a global outlier; they invest roughly 51% of their assets outside the UK and only 32% domestically, heavily skewed toward government gilts and corporate bonds.

  • High levels of gilt issuance and investment are actually a sign of economic failure, indicating the government's inability to balance its books.

  • Investing heavily through traditional financial intermediaries often distances funds from the real economy, driving them toward secondary market trading instead of primary industrial development.

  • Divestment strategies and ESG labels often amount to mere virtue signalling rather than delivering positive, real-world outcomes.

The report suggests transitioning toward "political capitalism," where private and public sectors align to deliver sustainable societal benefits. Establishing a virtuous cycle of direct primary investment in the real UK economy will increase employment, improve returns, and drive higher retirement contributions. Trustees must recognise that their fiduciary duty fundamentally requires balancing multiple factors, including the long-term socio-economic impacts that directly affect their members' future living standards. By demonstrating tangible benefits to the domestic economy, pension funds can rebuild their political capital and justify their substantial fiscal privileges.

Download the full report