Pension schemes are in favour of the Labour government introducing tax incentives to increase pension investment in UK growth, according to a new survey.

The government announced a two-stage pension review last Saturday, with the first phase focusing on pension investment and the second on retirement security.

Two days earlier, the XPS Group had polled 320 pension scheme representatives who attended a webinar on the 18 July.

The results revealed that more than half (56%) view new tax incentives as being the best way for the Government to drive pension investment in UK growth, while just under a third (30%) think the Government must improve the attractiveness of the UK investment market first in order to drive increased investment.

Almost two in five (39%) believe that mandating higher contributions is key to the Government improving retirement security. While almost a quarter (23%) support incentivising ‘sidecar, or short-term savings alongside pensions, to enhance retirement security.

Sophia Singleton, head of DC advisory at XPS Group, said: “While the government’s review of DC investment in UK growth is welcome, policymakers must recognise the strengths of existing investment strategies. To invest more of DC savings in the UK, clear incentives and new opportunities will be needed.

“The second stage of the review will also be crucial. Improving the adequacy of savings not only bolsters retirement security but can also drive more pension investment in the UK economy.”

Wayne Segers, partner at XPS Group, pointed out that there was only passing mention of private DB pensions in the pension review.

He said: “It is unlikely that trustees and employers of DB schemes will be persuaded by any Government to add significant investment risk given the hard-fought security achieved over the last 20 years. And the level of members’ benefits in DB does not directly depend on investment returns.

“Rather, the Government should progress changes to surplus rules, ideally as part of the announced Pension Schemes Bill.”