Require ‘default’ UK weighting in pensions or risk stock 'doom loop'

Most Brits want to see more of a home bias in their pension funds

Pension funds should be required to have a “default” UK weighting to prevent the London stock market getting caught in a “doom loop”, a new report has argued.

A UK weighted default fund with an allocation of between 20-25 per cent, if made a requirement for defined contribution (DC) pensions with an opt-out for individuals, would pump an extra £76bn into UK equities to rejuvenate the public market, according to projections from New Financial.

“For at least the past decade, the UK stock market has been locked in a self-fulfilling ‘doom loop’ of lower valuations, lower demand and lower performance.”

“External factors such as the disruption from Brexit, a worsening economic outlook and political instability have collided