Blog: Unlock £50bn pension investments using post-Brexit freedoms, Treasury urged – The Telegraph

Post-Brexit freedoms should be used to liberalise pensions and unlock £50bn in tech investment, the Lord Mayor of London has urged the Treasury.

The Government should scrap red tape preventing private pensions from plugging a £15bn per year funding gap backing British business, according to a new report by the City of London Corporation, EY and Innovate Finance, a fintech industry body.

Chancellor Jeremy Hunt hopes to boost Britain’s financial services via his Edinburgh Reforms, a series of regulatory changes made possible now that Britain is outside the European Union.

These plans include proposals to increase the pace of consolidation of defined contribution pension schemes – a move which in his Spring Budget Mr Hunt said was “critical” to bolster retirement incomes and build the next generation of globally competitive companies.

Mr Hunt also has a stated aim of transforming the UK into a “science and tech superpower”.

Nicholas Lyons, Lord Mayor of London, called for rule changes that will allow smaller defined contribution pension schemes to be consolidated, creating economies of scale that will allow greater risk diversification.

In its “Powerful Pensions” report, the City also called for a future growth fund targeting £50bn to provide new investment for the UK’s fintech, biotech, life sciences and green technology sectors.

Its authors estimate that there is a “growth funding gap” of £1.5 trillion that could be used by domestic institutional investors to back creative and innovative businesses, many of which are in the financial, professional service and technology industries. 

Only 1pc of the £4.6 trillion held in pensions and insurance assets is invested in unlisted companies, the report’s authors add. 

Alderman Lyons warned that businesses are struggling to grow domestically and compete globally because of a shortfall in investment, while pension fund members are missing out on high returns.

Alderman Lyons said: “The UK has the second largest pension fund pot in the world, but UK pension funds invest less in private equity and infrastructure than our competitors. 

“We’re missing a trick here – which is leading to the majority of UK pension funds and their scheme members not benefiting from these high growth investment opportunities.”

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