With the new government promoting a growth narrative, a new Pensions and Lifetime Savings Association (PLSA) report calls on the government to create the necessary investment conditions for pension schemes to allocate a greater portion to UK growth areas.
For some time there has been a debate about pension funds allocating more to emerging – but higher risk – sectors that could drive UK economic growth.
In its Pensions & Growth: Creating a pipeline of investable UK opportunities the PLSA calls on the government to provide policy and regulatory certainty to improve the UK’s appeal versus investment opportunities globally.
This includes developing a long-term strategy for investment and growth, outlining the government’s priority investment sectors, its approach to blended finance and how it will work with the pensions industry.
The PLSA also says the government should offer targeted fiscal incentives to make UK growth assets more attractive than competing assets from other countries.
Enhancing the tax treatment of domestic investments, as they do in France and Australia, merits further exploration, the PLSA said. In addition, initiatives like LIFTS, which supports investment in UK start-ups and companies requiring late-stage growth capital, should also be considered.
The government should also expand the area of focus beyond private equity and venture capital to encompass infrastructure, alternative assets and a variety of funding models, said the PLSA.
Nigel Peaple, policy and advocacy director at the PLSA, said: “The UK has considerable need of greater investment to achieve the Government’s goals on growth and the transition to net zero. Pension funds have an important part to play in achieving greater investment in the UK where this is consistent with achieving the right returns for pension savers.”
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