(Bloomberg) -- Chancellor of the Exchequer Jeremy Hunt is considering plans to spur pension funds to boost investments in UK assets, part of government efforts to lift economic growth and help Britain’s struggling equities market.

Hunt is reviewing options including requiring pension funds to disclose their allocations to different UK asset classes, and launching an independent review to determine an appropriate threshold of UK asset allocation for pension pots, according to two people familiar with the matter, who spoke on condition of anonymity about plans that haven’t been finalized. The proposals could be revealed at the budget on March 6, they said.

Hunt is trying to encourage pension funds to deploy more of their capital in a way that boosts the domestic economy, as the government seeks to increase growth in the wake of a recession at the tail end of 2023 and ahead of an election expected later this year. Nevertheless, the pensions industry pushed back against the proposals, saying they risked duplicating existing rules on reporting and that it isn’t for the government to decide how funds allocate their assets.

“If you have a mandation it comes with risk on asset concentration, lack of supply and all sorts of things,” said Joe Dabrowski, deputy director of policy at the Pensions and Lifetime Savings Association, which represents workplace pensions with £1.3 trillion ($1.6 trillion) of assets on behalf of 30 million savers. “Also, is it the role of the government to direct institutions to allocate money to a particular asset class? No, is the view of pension funds.”

Dabrowski also argued that “there’s a lot of disclosure already required from pension schemes,” and that “duplication is not going be particularly helpful.” He added that the industry has engaged with both the ruling Conservatives and the Labour opposition and that any future government will look at institutional capital to help generate more growth. 

Hunt already had some success at his Mansion House speech in November when nine of Britain’s largest pension providers agreed to commit to allocating 5% of their assets to growth companies by 2030. 

“We remain committed to growing the economy and increasing investment in UK businesses,” a Treasury spokesperson said in a statement. “Already the Mansion House Reforms have encouraged pension funds to reach 5% investment in unlisted equities, unlocking £75 billion to grow the economy and increasing returns for pension savers.”

UK pension funds have been reducing their exposure to British equities over the past 25 years, withdrawing £400 billion of demand over that period, according to a report last year by the New Financial think tank. Since 2000, the share of the UK stock market owned by UK pensions and insurance companies has fallen to 4% from 39%, the report said.

The shift in pension fund investment has been one of the contributors to the weakness of the UK equity market, which has seen continued outflows in recent years. Policymakers are concerned that Britain’s weak equity market is linked to low investment rates and the country’s sluggish productivity growth.

Read More: Why UK’s Once-Vibrant Stock Market Is In the Doldrums: QuickTake

Another option Hunt is considering to boost equities is a so-called British ISA, a tax-free savings account for investing in British stocks. Hunt said earlier this month that he is “very attracted” to the idea, and the proposal could feature in his Budget next month.

--With assistance from Loukia Gyftopoulou.

(Updates with further Dabrowski comment in fifth paragraph.)

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