[LONDON] Some of the UK’s largest pension providers and insurers have formed a group seeking to channel more money into the nation’s infrastructure and fast-growing businesses in sectors including artificial intelligence (AI) and fintech.
The “Sterling 20” group will work with the UK’s Office for Investment to identify regional investment opportunities, the UK Treasury said in a statement on Monday (Oct 20). The announcement comes ahead of a regional investment summit the government will host in Birmingham on Tuesday.
Legal & General Group, the UK’s largest asset manager, and government-backed pension fund Nest, have already committed billions to build more affordable housing and improve broadband connections in rural areas, according to the statement.
Chancellor of the Exchequer Rachel Reeves has increased pressure on pension funds to do more to support the UK economy, following years of outflows from domestic assets. While UK pension funds doubled their investment in unlisted equities over the past year, they so far remained below the levels needed to meet a pledge to the government to support private businesses, figures published by Association of British Insurers showed last week.
The government this year said it will take a “reserve power” to force pension funds to invest in the domestic economy – a move that’s fiercely opposed by investment managers who believe the choice of where to place savings is solely their clients’ prerogative.
Pension providers have also cited cost concerns and performance fees as barriers to further boost investments in private markets. BLOOMBERG