Pension funds used to ‘unlock growth in every postcode’, Burnham says

Major pension providers will help give entrepreneurs capital

Major UK pension providers have joined forces with Burnham’s Government to create a new £1billion fund for science and tech startups, fuelled by UK pension pots. The new PM promised this step will “unlock good growth in every postcode” and potentially deliver strong returns for savers.

The new UK Scale-up Fund is the first of its kind. It will use pension investments to back UK companies that are looking to scale up their businesses, potentially offering greater returns for investors in the long run. It’s being backed by institutional investors and the British Business Bank and aims to give local entrepreneurs the capital they need to grow without needing to look at foreign investors. Here is how it could affect your pension pot.

What does it mean for your pension?

Pension pots are not cash savings, they are investments and what your specific pot is invested in will depend on your risk appetite, circumstances, provider and personal choices. The new fund will see £1billion from affected pension pots invested in the specific startups.

The pension providers involved in the new fund handle defined contribution, defined benefit and Local Government Pension Scheme funds. The new £1billion fund is meant to provide better long-term returns for people invested in these pots, providing them a bigger total pot when they retire. While also using the investments to help science and tech startups grow.

What happens next?

For pension providers, the Government and the British Business Bank, there is still a lot to do to get the new fund off the ground. Starting with looking for an asset manager to handle the new £1billion investment pool.

However, everyday savers won’t need to take any action themselves as it should be managed by your pension provider.

Prime Minister Andy Burnham said: “Today sends a clear message: this is a vote of confidence in British business, British talent and British ambition.

“This new fund would help unlock good growth in every postcode, connecting pension investment with the entrepreneurs and technologies that will reindustrialise Britain and create the jobs of the future.

“That means more opportunities for working people, stronger returns for savers, and more businesses choosing to start, grow and stay in Britain.”

Chancellor of the Exchequer John Healey said: “We create great companies in Britain but don’t do enough to grow them with British capital and keep profits in the UK.

“I want the UK to become the best place in the world both to start and scale a business, with investment, jobs and skills in every region.

“We have the third largest Venture Capital market in the world and this new £1 billion fund will mean more British money to back British scale-ups and better returns for pension savers.”