Ahead of her Mansion House speech, Chancellor Rachel Reeves has been warned against mandating pension assets towards risk capital by an influential investor and Bank of England director.
Dame Anne Glover, co-founder and chief executive of Amadeus Capital Partners and non-executive director at the Bank of England, said that current efforts to ensure funds go to productive assets, though “well-intentioned for the long term”, are creating “immediate uncertainty”.
Though she is supportive of the government’s efforts to unlock pension capital to support UK growth, the veteran investor said: “I don’t believe that mandating allocations to risk capital will address the root causes of underinvestment.
“Structural barriers, regulatory uncertainty, and a lack of short-term incentives continue to hold back progress.”
As part of the Treasury’s efforts to put British pension assets towards startups, ministers have been handed certain powers to mandate allocations towards risk capital, separate from the voluntary agreement referred to as the Mansion House Accord.
“Intervention is necessary, but it must be nuanced, flexible, and responsive to market realities,” Glover said.
“Many local government pension schemes are pausing investment decisions because they’re unclear about their future. We must work with the Government to introduce targeted, short-term incentives that can catalyse change now – while laying the groundwork for long-term reform.”
Reeves will give her Mansion House speech on Tuesday evening, where she is expected to double down on government plans to cut burdensome regulations to streamline the financial sector.
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