UK to unveil pension fund reform plan for tech startups

Pension SuperFund

Among the steps introduced by the government was an agreement among the country’s biggest DC pension providers to allot 5 per cent of assets in their default funds to unlisted equities by 2030

Britain announced plans to make sure that billions of pounds’ worth of pension fund money will be unlocked to invest in early-stage companies, looking to bolster economic growth amid criticism that the country is becoming an unappealing place for technology.

In a speech on Monday, U.K. Finance Minister Jeremy Hunt outlined several reforms to boost returns for pensioners by £1k a year by permitting them to reap the long-term returns from investments in privately-held startups.

Among the steps introduced by the government was an agreement among the country’s biggest DC pension providers to allot 5 per cent of assets in their default funds to unlisted equities by 2030.

This could unlock up to £50bln of investment in high-growth companies if all other DC pension schemes follow suit, Hunt added.

In the meantime, average earners’ pension pots could increase up to 12 per cent to £16k with DC pension schemes committing to more effective investments, Hunt said.

The U.K. has the biggest pension market in Europe, worth more than £2.5trln.

We want to be the world’s next Silicon Valley and a science superpower, accepting new technologies such as artificial intelligence (AI) in a way that brings together the skills of our financiers, entrepreneurs and scientists to make our country a force for good in the world, while leading the way on AI safety, Hunt was expected to say in his speech at Mansion House, as per prepared remarks shared with CNBC by the Treasury Department.

That means ensuring our financial services sector, conventionally so nimble and agile, has the right architecture to provide the best possible security for investors as well as capital for businesses, and the best talent right here in the UK to make that happen, he added.

Hunt also committed to an “intermittent trading venue” that makes it possible for public market investors to trade shares of unlisted companies. This would act as a halfway house for privately-traded companies looking for alternative ways of raising capital to public listings.

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