Jeremy Hunt is to set out plans to give a multibillion-pound boost to Britain’s fastest-growing companies by overhauling pension investment.
In his speech in the City of London on Monday, Mr Hunt will detail a set of measures designed to encourage the financial sector to “unlock capital” and increase returns for pensioners.
Alongside regulatory reforms, he will welcome an agreement with leading pensions firms to put 5 per cent of their investments, a sum of up to £50bn, into high-growth businesses.
The reforms will represent an “evolutionary” change to the British pensions market, Mr Hunt is set to say.
Aviva, Legal & General and Phoenix Group are among those understood to be taking part.
Pensions firms welcomed the fact that Mr Hunt was not making the move mandatory, as the industry had been warning against.
Chancellor Jeremy Hunt will make a speech to the City of London on Monday
In his annual Mansion House speech, the chancellor will promise to put the needs of pension savers “first and foremost”.
“It will be an evolutionary, not revolutionary, change to our pensions market,” he is expected to say.
Mr Hunt will pledge to prioritise a “strong and diversified” gilt market, meaning that he will not force firms to favour riskier investments over the low-risk ones offered by the government.
He will also set out a “golden rule” to never make changes that “compromise” the sector, with what he is calling the Mansion House Reforms.
Nigel Peaple, policy director at the Pensions and Lifetime Savings Association, said: “The chancellor has confirmed today that the pensions sector will keep their freedom to invest in the interest of the individuals whose savings they manage.
“This is the key priority for the pensions sector, and we welcome that Mr Hunt has listened to our views on this important matter.
“After the gilt market turmoil of last September, it is reassuring that the government is committed to a strong and diverse gilt market and that, in consequence, it is seeking evolution not revolution with regard to pensions.
“We look forward to continuing our dialogue with the government on their proposed pensions reforms, seeking always to achieve outcomes that mean a ‘win, win, win’ for savers, pension schemes and the UK.”
Michael Moore, chief executive of the British Venture Capital Association, said: “We welcome the chancellor’s recognition of what we have known to be true for a long time – that British pension savers are losing out.”
