The UK government will spend more than £300 million to ‘unlock’ £50 billion in capital from British pension funds, Chancellor Jeremy Hunt has said.
Dubbed the Mansion House Reforms and announced by the Chancellor earlier this year, leading pensions firms agreed to put 5% of their investments into early-stage businesses in the fintech, life sciences, biotech and clean technology sectors by 2030.
The move was pitched as a way to help increase the retirement savings of a typical earner who starts saving at 18, by 12% over their career, or more than £1,000 more a year once they stop working.
The government estimated that the reforms could release £50 billion of scale-up investment if the rest of the industry follows suit.
On Tuesday the Treasury said that £320 million would be used to help unlock that investment, with £250 million committed to two successful bidders under the long-term investment for technology and science initiative.
It works with industry to establish new funds to invest in science and tech companies.
A new growth fund is also set to be established within the British Business Bank.
Another £50 million will be provided for the bank’s funding programme for promising firms, with another £20 million to support more spin-out companies from university research.
It comes after the Financial Times reported this week that Hunt’s reforms are facing hurdles amid concerns from pension funds about shifting to riskier assets.
The Chancellor will deliver his autumn statement on Wednesday. He said it would be a ‘huge step forward’ in delivering on the pension reforms.
‘Innovation is the key to our future success as a nation and it’s vital that we do all we can to help companies start, scale and grow in the UK.
‘Tomorrow’s autumn statement will be a huge step towards delivering our Mansion House Reforms and unleashing the full potential of our pensions industry,’ he said.
By Dominic McGrath, PA Political Staff
Press Association: News
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