Jeremy Hunt is set to announce hotly-anticipated plans to supercharge pension funds to invest in high-growth sectors and boost British businesses.
The Chancellor will spell out his plans today to encourage schemes to invest cash in infrastructure, startups and green tech – in a bid to rocket power the UK’s growth while avoiding adding to the debt pile.
Speaking at Mansion House in the City of London, Hunt is expected to explain how his plans could secure funds for firms while expanding on returns for pensioners, the Treasury said.
One top industry source said Hunt will unveil a list of insurers and asset managers who have agreed in principle to invest more in alternative assets, according to the Reuters news agency.
“Everything we do we will seek to secure the best possible outcomes for pension savers, with any changes to investment structures putting their needs first and foremost,” he will say.
The wide-ranging measures build on the Edinburgh Reforms of 2021, the Treasury added. However, the pensions industry has said it opposes mandatory investment quotas.
The Chancellor will also pledge to business leaders and CEOs to prioritise a “strong and diversified gilt market” in a bid to soothe fears the funding push could damage the government’s bond market.
Changes will be “evolutionary not revolutionary”, he is set to say, vowing the reforms would never compromise Britain as a leading financial centre, and be led by three golden rules.
The government has said: “Firstly everything we do we will seek to secure the best possible outcomes for pension savers, with any changes to investment structures putting their needs first and foremost.
“Secondly we will always prioritise a strong and diversified gilt market. It will be an evolutionary not revolutionary change to our pensions market. Those who invest in our gilts are helping to fund vital public services and any changes must recognise the vital role they play.
“The third golden rule is that the decisions we take must always strengthen and never compromise the UK’s competitive position as a leading financial centre able to fund, through the wealth it creates, our precious public services.”
Lobby group The City UK said the government needed to follow the example of Australian and Canadian pension funds to create growth and deliver higher returns.
“We need to follow their example, encourage consolidation of schemes and deliver better retirements, which will also support growth,” it said in a statement.
Hunt on tax cuts
The ‘Mansion House Reforms’ echo prime minister Rishi Sunak’s priority to grow the economy by making the UK the most globally innovative and competitive financial centre, while reiterating that bringing down inflation remains the government’s core priority.
Financial and professional services industries employ over 2.5m people and generate more than £100bn in tax revenue, paying for half the cost of running the NHS, Hunt will highlight.
He will also hail the importance of the traditionally “nimble” and “agile” sector for the government’s vision of Britain as a science superpower and the world’s next Silicon Valley.
The Chancellor has also played down the possibility of tax cuts in the short term, and suggested the government may rule out inflationary pay rises.