Pension Megafunds Could Unlock £80 Billion of Investment as Chancellor Takes Radical Action to Drive Economic Growth
2024-11-13 22:00
London, UK – The UK government has announced a radical new plan that could unlock £80 billion of investment from pension megafunds, in a bid to drive economic growth.
The plan, unveiled by Chancellor of the Exchequer Jeremy Hunt, will allow pension funds to invest up to 20% of their assets in “growth-oriented” assets, such as infrastructure, real estate, and private equity.
This is a significant departure from the current rules, which limit pension funds to investing up to 5% of their assets in these types of investments.
The government believes that the new rules will help to boost economic growth by providing more funding for long-term infrastructure projects and other growth-oriented investments.
The £80 billion figure is based on the assumption that pension funds will invest the full 20% of their assets allowed under the new rules. However, the government has said that it expects the actual figure to be lower, as some pension funds may choose to invest less than the maximum allowed.
The new rules will come into effect in 2025.
The government’s announcement has been welcomed by the pension industry.
The Investment Association, which represents the UK’s investment management industry, said that the new rules will “unlock a significant pool of capital for long-term investment in the UK economy.”
The National Association of Pension Funds (NAPF), which represents the UK’s pension funds, said that the new rules will “provide pension schemes with greater flexibility to invest in a wider range of assets.”
However, some experts have raised concerns about the new rules.
The Trades Union Congress (TUC), which represents UK trade unions, said that the new rules could lead to pension funds taking on more risk.
The TUC said that “the government must ensure that pension funds are properly protected from losses.”
The government has said that it will work with the pension industry to develop a new set of guidelines for investing in growth-oriented assets.
The guidelines will set out the risks involved in these types of investments and will help pension funds to make informed investment decisions.
The government’s announcement is part of a wider package of measures designed to boost economic growth.
Other measures in the package include:
- Cutting taxes for businesses
- Investing in infrastructure
- Promoting innovation
The government hopes that these measures will help to boost economic growth and create jobs.
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