Jeremy Hunt’s plan to turn pension funds into startup funding – POLITICO

LONDON — “A grand prize ain’t free,” as the Streets sang. But if Chancellor Jeremy Hunt gets his way, Britain’s young workers could earn £1,000 more a year when they retire, the Treasury says.

This evening at London’s Mansion House, Hunt outlined his plans to boost pension fund investment in Britain’s technology companies, with the biggest funds pledging to put 5% of their funds in unlisted shares.

Explaining in his annual speech how he wants to create the “next global Silicon Valley”, Hunt said the UK was in a “perverse” situation where British investors were investing less in the country’s high-growth companies than in international retirees.

To reverse this trend, he introduced the “Mansion House Compact” which commits nine of the largest defined contribution schemes to invest at least 5% of their funds in unlisted shares by 2030.

This could unlock £50bn of investment in high-growth businesses, the chancellor said.

The Treasury said the package of reforms could help increase the pension amount of an average worker who starts saving at age 18 by 12% over the course of their career, worth an extra £1,000 a year. retired.

Signatories include Aviva, Scottish Widows, L&G, Aegon, Nest and Smart Pension.

The full policy plans will be set out in the autumn statement, along with a consultation on doubling local government pension schemes’ investment in private equity to 10 per cent. The government says this could unlock an extra £25 billion.

Hunt also asked the British Business Bank to examine whether the government should play a greater role in setting up investment vehicles.

Britain’s tech industry has long argued that domestic pension funds are too risk-averse and must look abroad for investors.

Startup Coalition executive director Dom Hallas said: “Encouraging UK pension funds to deploy more capital into private markets, including venture capital-backed startups, is truly the white whale of the world. British technology policy. The Treasury deserves enormous credit for building a framework to support it – all we need to do now is ensure the money is deployed.

Brent Hoberman, executive chairman of the Founders Forum, added: “This should be good news for UK industries of the future, their ability to attract more capital will create more national champions. »

But the plans, which were discussed in the media last week, faced backlash from pension funds, which had initially warned against making the scheme compulsory, fearing that retirees would risking losses and worrying about the creation of asset bubbles. They have since voluntarily registered.