UK Finance Minister Jeremy Hunt Reveals £64 Billion Pension Fund Boost for Tech Startups
In an effort to counter criticism that the UK is losing its appeal as a technology hub, the British government has announced a groundbreaking plan to unlock billions of pounds from pension funds. UK Finance Minister Jeremy Hunt unveiled a series of reforms aimed at stimulating economic growth and ensuring that pensioners benefit from investments in early-stage firms. The move aims to bolster the country’s tech sector and establish it as the next Silicon Valley.
Pension Providers to Invest 5% of Assets in Unlisted Equities by 2030
Under the new measures, the largest defined contribution pension providers in the UK have committed to allocating 5% of their assets to unlisted equities by 2030. This significant step could unleash up to £50 billion (approximately $64 billion) of investment in high-growth firms. If other defined contribution pension schemes follow suit, it would amplify the impact, supporting the country’s ambitions to become a global tech powerhouse.
Enhanced Returns for Pensioners and Increased Pots for Average Earners
Finance Minister Jeremy Hunt emphasized that these reforms aim to benefit pensioners and average earners. The projected increase in effective investments could result in pension pots rising by up to 12%, potentially reaching £16,000. The goal is to generate long-term returns and provide pensioners with an additional £1,000 ($1,283) annually. By unlocking pension funding for startups, the government aims to ensure that individuals reap the rewards of investments in privately-held early-stage companies.
Intermittent Trading Venue to Support Capital Raising for Unlisted Firms
To facilitate capital raising for unlisted firms, the UK government plans to establish an “intermittent trading venue.” This venue would allow public market investors to trade shares of privately-held companies. Acting as a midway point between private and public listings, this initiative offers an alternative way for unlisted firms to raise capital. By expanding access to investment opportunities, the UK aims to attract more tech companies seeking funding avenues.
Addressing Criticism and Rebuilding Tech Confidence in the UK
Recent criticisms from prominent tech voices have raised concerns about the UK’s attractiveness as a tech business hub. Microsoft President Brad Smith expressed disappointment after regulators blocked the company’s takeover of Activision Blizzard. Fintech firm Revolut’s CEO, Nikolay Storonsky, cited an unfavorable tax regime and bureaucratic regulations as reasons not to list in London. Additionally, chip design firm Arm’s decision to list in the US dealt a blow to the UK’s ambitions of becoming a global tech IPO destination. These reforms aim to address these concerns and rebuild confidence in the UK tech ecosystem.
UK Aims to Lead the Way in AI and Technological Advancements
In his speech, Finance Minister Jeremy Hunt outlined the UK’s aspirations to become a global leader in AI and technological innovation. He emphasized the importance of fostering a robust financial services sector that provides both security for investors and capital for businesses. By embracing new technologies like AI and leveraging the skills of financiers, entrepreneurs, and scientists, the UK aims to position itself as a science superpower. The government’s commitment to AI safety and creating an environment conducive to tech growth underscores its determination to lead the way in the global tech landscape.