By Iain Withers
LONDON (Reuters) -Major British pension funds pledged on Tuesday to invest billions of pounds extra in UK businesses and infrastructure, as the government leans on private investors to help it fund public projects and boost economic growth.
Seventeen investment firms said they would invest up to 10% of their pension portfolios into infrastructure, property and private equity by 2030, of which half will be ringfenced for UK assets, according to a government statement.
The pact is backed by investment firms including Aviva, Legal & General and M&G and would unlock up to 50 billion pounds ($66 billion) of additional investment, the government estimated.
The Mansion House Accord – which builds on an earlier pact in 2023 – is currently voluntary, but the government said it would monitor progress against the commitment and it would be “reinforced” by further measures in an upcoming pensions review.
The Financial Times and other media have reported that the government is considering giving itself the power to force pension funds to invest more in UK projects, which has concerned some executives who argue this would not be in the best interests of clients.
“We believe it is right to focus on efforts to unlock more domestic investment, but we believe the most sustainable solution lies in creating the right incentives, not mandates,” a spokesperson for one of the signatories, Phoenix, said.
Britain’s finance ministry was not immediately available for comment on the matter.
British finance minister Rachel Reeves said in a statement that the pact would help channel billions of pounds into major infrastructure projects, clean energy and startup businesses.
The new pact doubles the previous Mansion House investment target of 5% of pension pots on productive assets and broadens the range of applicable assets.
Other signatories include some of Britain’s biggest pension funds, the Universities Superannuation Scheme, the National Employment Savings Trust and The People’s Pension.
($1 = 0.7575 pounds)
(Reporting by Iain Withers; Editing by Andrew Heavens)
