But the maturity of the market is important here. Australia has mandatory employer contribution rates of 11 per cent, rising steadily to 12 per cent by 2025.
This compares with 3 per cent employer contribution rates in the UK, or 8 per cent in total, and of a band of earnings, meaning actual percentages are considerably below this for those on low earnings.
And while auto-enrolment has pushed up participation rates considerably, it’s not a mandatory savings system for employees.
Australia was once reliant on imported capital to fund many of its major domestic development projects, but is now somewhat awash with investment capital, partly thanks to the very high proportion of retirement assets it now enjoys.
It is less to do with a push on domestic investment, rather, the sheer weight of long-term savings now available.
Here, the proposal is that pension schemes will have to start disclosing the level of UK investment from 2027, with details to be consulted upon in the coming months.
While this will undoubtedly involve some change, there is already a considerable amount of disclosure as a function of a competitive market.
Various reports are produced annually, which set out how schemes are investing their default funds, and indeed relative performance between providers.
The government is effectively formalising this as a regulatory requirement, and this will no doubt ensure such reports are further reaching in future, including a wider range of providers.
The chancellor also announced the launch of British Savings Bonds, and a new variation within the Isa regime; the British Isa. This latter option creates an additional £5,000 allowance for investment in the UK, the details of which have still to be confirmed.
The new Isa is quite a different proposition from what has been announced on pensions.
While perhaps tasked with the same challenge – investing in the UK – the Isa offers the incentive of an increased tax-free allowance, albeit relatively small. But the real difference is likely to be the savers to whom it applies.
While some people are wealthy enough to fully utilise their annual £20,000 Isa allowance, and this will extend that, the vast majority of people either can’t afford to save into an Isa, or can’t afford to use the full allowance. For them, it is less clear what the benefit will be, or indeed whether it will create any additional investment.
The extent to which these measures will move the dial has yet to be seen, but the drive to increase investment in our economy is one that few people would argue with, and it’s right that we open this debate.
