Major UK pension providers have partnered with the Burnham Government to create a £1 billion fund for science and tech startups, fuelled by UK pension pots. The new UK Scale-up Fund is the first of its kind, using pension investments to back companies looking to scale up, potentially offering greater long-term returns for savers. It is backed by institutional investors and the British Business Bank, aiming to give local entrepreneurs capital without needing foreign investors.
What does this mean for your pension?
Pension pots are investments, not cash savings, and what your specific pot is invested in depends on your risk appetite, circumstances, provider and personal choices. The new fund will see £1 billion from affected pension pots invested in specific startups. The pension providers involved handle defined contribution, defined benefit and Local Government Pension Scheme funds. The £1 billion fund is intended to provide better long-term returns, resulting in a larger total pot at retirement, while also helping science and tech startups grow.
What happens next?
For pension providers, the Government and the British Business Bank, there is still work to get the fund off the ground, starting with finding an asset manager to handle the £1 billion investment pool. Everyday savers will not need to take any action as it should be managed by their 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." 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... 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."
