Pension giant to set up UK super fund to support Hunt

The chancellor has previously said he wants to boost returns for savers while putting more money into higher-yielding assets. Photo: Paul Grover for The Telegraph

The UK's largest long-term savings and pensions provider is drawing up plans for a new super fund to support fast-growing companies and support Jeremy Hunt.

Phoenix owner of insurer Standard Life , is in the early stages of creating a multi-billion pound investment vehicle that insiders say will help spur investment in high-growth industries and boost retirement incomes.

This includes pooling cash to invest in life sciences and fintech businesses, as well as infusing long-term venture capital into unlisted companies in the UK and overseas.

The fund, expected to launch this year, will also help the FTSE 100. The company must achieve a target of investing at least 5% of its defined contribution (DC) pension assets in unlisted companies by 2030.

It is understood that Phoenix, which has more than £280 billion in total assets under management and 12 million clients, currently has less than 1% of its corresponding cash invested in those assets.

This means it needs invest billions of dollars. pounds sterling in investments such as science and technology over the next five years, linked to reforms to the Chancellor's Mansion unveiled last summer.

The fund will also allow thousands of small pension funds to access venture capital. and fast-growing companies, contributing to the investment mechanism.

Small funds traditionally do not have the financial firepower to leverage these investments due to the higher costs charged by venture capital firms.

However, by transferring cash to the Phoenix fund, it is possible that even the smallest of the UK's 27,000 pension schemes will have access to this investment.

The idea was partly inspired by similar investment funds in Australia such as IFM, which specializes in infrastructure investments.

Mr Hunt announced he wanted to boost returns for savers while putting more money into productive and more profitable projects. assets under the plans, which were first announced in a speech at the mansion last year.

He said reforms could increase the size of individual pension pots to £1,000.

However, some pension funds have openly warned the Chancellor against introducing compulsory investment in the UK, which they say could reduce investor returns.

Phoenix is ​​reportedly aiming to attract around 40% of UK-focused investment under of its Mansion House commitment, but sources suggested that this is not the goal and the focus will be on location returns.

Britain's largest local city. The government pension scheme is also believed to be planning a new UK-focused fund as part of a new £2 billion investment in private markets.

Border to Coast, which manages pension funds for local civil servants from Bedfordshire to Teesside, will invest hundreds of millions of pounds of that amount in UK infrastructure, private capital and private lending next year. This will be achieved through a new UK Opportunities fund focused on UK assets.

Border to Coast is the largest local public pension scheme in the UK, with assets of just under £60 billion. Its new UK Opportunities fund will target projects including housing, transport and renewable energy that managers say will benefit the British community.

The Chancellor also used his March Budget to force asset funds to reveal how much of savers' money is invested in Britain as he seeks to attract more domestic investment.

Poorly performing funds will also be prevented from bringing in new business from pension schemes in the workplace.

Andy Briggs, chief executive of Phoenix, said he had previously warned that British pensioners were not saving enough for their retirement.

It is clear the government wants to increase the level of mandatory savings put into pensions through jobs schemes to 12%, but has not yet consulted on the proposal.

Mr Briggs previously told The Telegraph: “The state pension simply cannot cope with what it was originally designed to do.”

“Essentially, state pensions will have to pay later and at a lower level, and people will have to pay more personal attention.»

A Phoenix spokesman declined to comment.