Loosened pension rules could unleash £5bn tech and science investment
Government plans to loosen pension investment rules could unleash a wave of funding into the UK’s tech and life science sectors, according to new research.
Plans to relax a cap on money management fees for pensions investments, which are currently being mulled over by government following a consultation earlier this year, could unlock £5.26bn in funding to flow into tech and science as well as creating 8,900 new jobs, according to research from pension and insurance giant Legal & General and office firm Bruntwood.
Pension funds have traditionally been hamstrung by red tape which prevents money from flowing into private equity and venture capital, which typically charge higher performance fees.
Chris Oglesby, Boss of Bruntwood SciTech, a joint venture between L&G and Bruntwood, said the report made a powerful case for pension reform.
“This will unlock significant innovation, economic growth, and thousands of new jobs,” he said.
“Today, around 80 per cent of investment into UK tech and life sciences comes from overseas, largely institutional sources and especially from North America and Asia.”
Loosening the pension charge cap has been touted by many in the tech industry as a means of filling a dearth in growth funding for UK tech firms, estimated to be around £15bn, according the Scale Up Institute.
Start-up network TechNation and the UK’s most active investor BGF last week called on pension funds to step up and back British firms, after a Canadian pension fund led a round of investment into a UK fintech firm.
The report from BruntwoodSciTech also found that loosening pension rules would provide a lift to the ‘levelling up agenda’ by directing a surge of investment outside of London.
Investment into science and tech businesses in the North of England and Midlands would total £818m per year by 2025 – including £330m in the North West – with £810m heading into London firms.
“A private investment boom dovetails with the Government’s own efforts to address regional imbalances, such as spreading its own R&D spending more widely around the UK based on sectoral local strengths, and the £100m Innovation Accelerators in Glasgow, Greater Manchester and the West Midlands,” Oglesby said.