UK Chancellor Jeremy Hunt will unlock approximately £50bn from pension funds for investment into high-growth firms.
This proposal has been embraced by some of the UK’s largest pension companies including Aviva, Legal & General, Phoenix, and Scottish Widows, with these firms pledging to allocate 5% of their investments towards private equity and early-stage businesses.
This funding scheme aims to augment the retirement income of the British pensioners by over £1,000 annually, according to Hunt. This strategic move also serves the dual purpose of spurring growth among the country’s most promising companies. As Louis Taylor, CEO of British Business Bank, noted, this initiative holds potential for fostering an ecosystem that encourages third-party capital investment such as pension fund investment.
In a related effort to streamline capital markets, reforms are being proposed to simplify the rules for share trading. Furthermore, the government seeks to digitise share certificates to simplify the management of share registers for public companies. To facilitate the future of retail payments, an independent review has also been commissioned, with a focus on mobile payments.
Aside from the main announcement, the Lord Mayor of London, Nicholas Lyons, introduced the Mansion House Compact, a move aimed at channelling more long-term capital into UK growth companies.
This initiative aims to enhance retirement income by encouraging pension schemes to increase their allocation to unlisted equities, including venture capital and private equity. Co-founders of Smart, Will Wynne and Andrew Evans, lauded the effort as a significant step in fostering innovative, high-growth UK companies and ensuring better retirement outcomes for the country’s savers.
British Business Bank CEO Louis Taylor said, “I fully support the Chancellor’s request to explore establishing a vehicle that could receive third party capital such as pension fund investment”. Will Wynne and Andrew Evans, co-founders of Smart, said, “It’s excellent to see initiatives like this, encouraging the market to create more innovative high-growth UK companies, and in doing so to provide a better retirement for the country’s savers.”
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