Insurance companies have told the Treasury that if it wants them to invest in the economy it must create incentives that will improve the rewards for savers.

The Chancellor is expected to announce a policy initiative next week to encourage the pension industry to take a more active investment role in infrastructure and private companies.

Ahead of his statement, the Association of British Insurers said there must be no mandatory rules forcing pension funds to invest in any particular area and that savers must come first.

It also warned that schemes may be pressured into favouring different asset classes at different times, depending on which political party was in power.

Jeremy Hunt is expected to include the plan in his Mansion House address. He is likely to call for more of the £2.7 trillion managed by Britain’s pension schemes to be directed to illiquid UK assets such as infrastructure and private companies, including high-growth technology firms.

The ABI said: “Efforts to attract further investment in the UK economy must be part of a long-term strategy with savers at its heart.

“As the government looks to spur economic growth, attention has turned to whether pension savings can channel more money into UK companies. While pension schemes do already invest a great deal in the UK, the litmus test for any new policies must be that they deliver better outcomes for savers.

“It is possible for pension schemes to both invest more in the UK and continue to deliver the best outcomes for savers, but savers’ interests must come first.

“If the government wants to boost further UK investment, and peoples’ savings, it should focus on making the UK a more attractive market and create incentives for pension schemes.”

Banks summoned

Bank chief executives have been summoned by the UK’s financial watchdog to address concerns that savings rates are not rising as fast as mortgages.

Senior figures from Lloyds, HSBC, NatWest (RBS) and Barclays are to meet the Financial Conduct Authority (FCA) on Thursday.

Higher interest rates have seen banks raise mortgage costs but there are concerns that higher returns are not being passed on as quickly to savers.

Chancellor Jeremy Hunt has said it is an “issue which needs solving”.

The Financial Times, which first reported the meeting, said FCA officials would discuss with the banks the pricing of cash savings and how they communicated with their customers on rates.