- Major UK pension providers are exploring a £1 billion UK Scale-up Fund for high-growth British companies.
- The proposed fund aims to back science and technology businesses while delivering long-term returns for pension savers.
- The Government says the initiative could help create skilled jobs and keep more investment in the UK.
Some of the UK's largest pension providers are exploring plans to launch a £1 billion UK Scale-up Fund, a new investment vehicle designed to help Britain's fastest-growing science and technology companies expand while delivering long-term returns for pension savers.
The proposed UK Scale-up Fund would bring together institutional pension capital to invest in high-growth British businesses that often struggle to secure enough funding to scale. Supporters say the initiative could help more companies commercialise new technologies, create skilled jobs and remain headquartered in the UK rather than seeking investment overseas.
The British Business Bank is working with the consortium to support the fund's launch and intends to invest alongside participating pension providers. The Office for Investment is also helping develop the proposal.
Keeping British growth at home
One of the main goals behind the fund is to address a long-standing challenge for UK start-ups. Britain has produced many successful science and technology companies, but many have relied on overseas investors as they grow, meaning much of the financial return ultimately flows abroad.
The proposed fund aims to keep more of that investment within the UK by connecting pension savings with promising British businesses.
Prime Minister Andy Burnham reportedly described the proposal as a vote of confidence in British business, talent and innovation. He said the fund could help support economic growth across the country by linking pension investment with businesses developing future technologies.
Business Secretary Jonathan Reynolds reportedly said Britain has a strong track record of producing innovative companies but needs to ensure more of them can start, scale and succeed within the UK.
Chancellor John Healey reportedly said Britain creates successful companies but has not done enough to grow them using British capital. He added that the proposed fund could help generate investment, jobs and skills while improving long-term returns for pension savers.
A new role for pension savings
The initiative has drawn support from several major pension providers, including Railpen, Nest, LPPI, LGPS Central and Border to Coast, which believe long-term pension capital could play a greater role in financing innovative British businesses.
The organisations argue that investing in high-growth companies could offer attractive long-term returns while strengthening the wider economy that pension members will eventually retire into.
The consortium has not yet formally established the fund. Instead, members have committed to exploring its creation and will shortly begin a market engagement process to appoint an investment manager.
If the proposal moves ahead, it could mark one of the UK's largest attempts to channel pension savings into home-grown innovation, while giving fast-growing British companies another source of long-term funding without having to rely heavily on overseas investors.
