Pension cash could unlock billions for renewables

A pensions firm has written to both the pensions and climate change ministers to suggest that the billions of pounds controlled by self invested personal pensions investors could help the […]

A pensions firm has written to both the pensions and climate change ministers to suggest that the billions of pounds controlled by self invested personal pensions investors could help the government meet carbon-reduction targets.

Hornbuckle Mitchell managing director Dave White told Climate Change Minster Greg Bakerand Pensions Mininster Steve Webb that “an exemption for green-energy producing assets could unlock the potential of many billions held in pensions to help the government reach its target of 15% of energy coming from renewable sources by 2020”.

Mary Stewart, director at Hornbuckle Mitchell, told FTAdviser: “The government has pledged to clear away barriers to investment into renewable energy and we think a good place to start is with self-invested pensions.

“The calls we have received show there is interest from clients who see renewable energy projects as offering good potential returns while helping them to diversify into new asset classes.”

Currently, self invested pensions face high tax charges for investing in taxable property which includes plant and machinery.

But Hornbuckle Mitchell believes that the government could add renewable energy equipment to its list of exemptions.

A second step could be to allow the pension scheme to trade the power produced, perhaps by selling it directly back into the National Grid, claimed Hornbuckle Mitchell.

Ms Stewart said: “Most commonly, we simply get asked if a self invested personal pension member can use pension money to buy and bolt solar panels onto a commercial property or to invest in a wind turbine on their farm on in their depot. The current rules mean that we have to say no.

“Yet there are pension investors who would see this as a good opportunity to get into a different kind of asset class, and probably many environmentally-aware individuals who might engage more with pension planning if there was a way to more closely align it with their ethical stance.”

In the letter to minister, Mr White states that “there are many thousands of ‘hands on’ pension investors looking for long-term, secure returns and ways to diversify risk”.

“Renewable energy is a highly attractive asset class. Allowing direct investment from pensions could also send an important message to environmentally-aware Britons who are yet to take responsibility for their long-term retirement saving. Inspiring investors to back renewable energy projects could go a long way towards helping the UK meet and perhaps exceed its carbon reduction targets.”

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