UK pension fund trustees are balking at government efforts to encourage them to spend billions on the nation’s economic recovery, warning over potential conflicts of interests for their savers.

In an unprecedented intervention last week, prime minister Boris Johnson and chancellor Rishi Sunak published a letter to the industry, urging it to plough more cash into sectors such as infrastructure, to help the nation “build back better” in an “investment big bang” after the Covid-19 pandemic.

But UK pension funds, which have more than £1tn in assets, are generally wary of investments in private markets such as infrastructure and venture capital, fearing high fees that can erode retirement returns and poor liquidity that can impact the timing of pension payouts.

“Suggestions that trustees should favour UK opportunities to help us ‘build back better’ get short shrift from me,” said Andrew Warwick-Thompson, a trustee with Capital Cranfield, the professional trustee firm, and a former senior executive with The Pensions Regulator. “UK illiquids will have to stand up to the same due diligence process as any other investment decision.”