*

Industry must have full discretion over private assets

push

*

12.5 million UK savers cannot currently afford retirement,

CEO

says

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Long-term investors have little to fear from volatility

spikes

By Sinead Cruise

LONDON, May 15 (Reuters) - A sector-wide push into

private assets should help millions of pension savers achieve

higher returns and avoid old age poverty as long as the

government doesn't seek to dictate how providers invest that

cash, Aviva CEO Amanda Blanc told Reuters.

Seventeen investment firms running trillions of pounds in

insurance and pension assets pledged on Tuesday to pump up to 50

billion pounds ($66.38 billion) of additional investment into

unlisted firms, property and infrastructure, as the government

leans on private capital to fund public projects and boost

growth.

The so-called Mansion House Accord aims to bolster pension

fund returns and encourage UK savers to stop sitting on cash and

put more money into higher-growth, productive domestic assets.

But there are fears the government could try to compel

insurers to support politically sensitive projects or demand

mandatory investment levels in riskier assets like venture

capital (VC) against the best interests of pension investors.

"We think the red line is mandation. We do not believe that

is a necessary strategy ... and it is important those VC funds

are invested with the interests of the individual pension savers

in mind and the trustees have a fiduciary duty to do so," Blanc

said, after Aviva posted higher first-quarter general insurance

premiums.

"These are asset classes which are very, very well known to

insurance companies. We've got long histories of investing well

and delivering really good returns in those segments."

UK pensions minister Torsten Bell has said the accord with

pension providers represented a voluntary commitment and there

was "no mandation".

He also rejected the idea that the government could face

pressure to compensate schemes if returns disappointed.

VOLATILITY

BlackRock ( BLK ) CEO Larry Fink earlier this week warned of

sustained volatility in financial markets, and said investors

were now hoarding tens of trillions of dollars in cash amid

trade war worries and uncertainty over the U.S. economy.

Blanc echoed those concerns and called on savers to engage

fully with their pension providers, the majority of which had

little to fear from the recent ructions.

"We shouldn't get confused about the market volatility that

goes on in any particular period of time. We are, as insurers,

long term investors. We are not forced sellers. And periods of

volatility really do not impact that," she said.

"What we know is that 12 and a half million people in the UK

will not have enough money to retire if we carry on investing in

the way that we do today," Blanc said, citing official data from

the Department of Work and Pensions.

According to the Pensions & Lifetime Savings Association,

the current average annual pre-tax retirement income is around

21,000 pounds, comprising around 9,000 pounds in income from a

private pension plus state pension of 11,500 pounds.

This compares to the PLSA recommended level for a moderate

living standard of 31,300 pounds.

($1 = 0.7533 pounds)