The U.K. government has been urged by an industry panel to create programs that will increase opportunities for retirement plans to invest in venture and growth capital funds.
The Pensions & Private Capital Expert Panel called for the creation of a program based on France’s Tibi initiative, establishing a market of private capital funds specially accredited for defined contribution plans. The panel said in a report that such a move would facilitate investment in strategically important sectors.
The panel’s report also called for a fund-of-funds investment vehicle as part of a series of initiatives to build on the British Business Bank’s British Growth Partnership, which could enable access to returns generated by smaller private capital funds.
The final major recommendation from the panel was for the introduction of a private capital directory, containing the key facts and information of specific private capital funds that would be made available to U.K. defined contribution plans, acting as a "shop window" to accelerate investment.
"The real value over the last year has been the opportunity to convene so many experts together for the first time in the same room and learn more about each other’s constraints and ambitions," said Kerry Baldwin, managing partner at IQ Capital Partners and chair of the panel, in the report. "There is no overnight solution, nor a magic button to unlock the funds, and we must continue to work together to achieve the target."
The panel also includes officials from the £49 billion ($63.4 billion) National Employment Savings Trust, London; industry groups British Private Equity & Venture Capital Association, Association of British Insurers, and Pensions and Lifetime Savings Association; and asset managers Phoenix Group and M&G.
BVCA data shows that, across defined benefit and defined contribution plans globally, 16 times more capital goes into U.K. private capital funds than from domestic pension funds and other retirement plans.
At ABI's last assessment, carried out in the summer, just 0.36% of the default funds of Mansion House Compact signatories were invested in private equity assets.
Torsten Bell, the U.K.'s minister for pensions, could not be immediately reached for comment.
