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An influential group of City of London chief executives Jeremy Hunt to enact reforms aimed at freeing up more investor capital to support UK businesses and boost the economy I called to
In a letter seen by the Financial Times, the UK Capital Markets Industry Task Force (CMIT) told the Prime Minister that there would be a “substantial increase in the amount of longer term UK pension capital that would be used to fuel the growth engine of the UK economy and deliver better returns to savers.” I have an opportunity,” he said. and faster growth in the country’.
The letter from a group chaired by Julia Hoggett, head of the London Stock Exchange, came ahead of Hunt’s spring budget on March 15 amid concerns over the competitiveness of the UK stock market.
Technology group Arm and building materials giant CRH have said they intend to list on the New York Stock Exchange this month, while other London-based companies have moved to the United States following concerns about low valuations and liquidity. I am planning to migrate. Lack of investment in UK stocks.
The CMIT noted that support for UK assets by domestic pension schemes and insurers had “decreased”.[ed] Incredibly fast.” Only 5-6% of total investment in public and private companies.
In response, it called for “rapid integration of the UK pension system, structural incentives to deploy its capital in the UK and a renewed focus on returns rather than just fees”.
Integrating smaller defined benefit and defined contribution pensions into larger schemes “provides the level of sophistication needed to assess growth investment opportunities,” he said, referring to England and Wales. He added that the consolidation of 86 local government pension funds would be the starting point. Some companies are already pooling their investments.
The group, whose members also include Schroeder chief Peter Harrison and Phoenix boss Andy Briggs, proposed that the Treasury Department consider tax exemptions to encourage domestic investment.
CMIT says a return to pension fund allocations to 2007 levels of 25% would generate between £847bn and £920bn of pension fund and insurer money to support the UK economy.
Any reforms would also encourage other countries to deploy capital to their domestic businesses, pointing to the EU’s proposal to relax US inflation reduction laws and state aid rules for green industries and create a European Sovereignty Fund. He added that it would be a response to movement. .
A letter signed by Harrison and Briggs on behalf of the group warned that there would be no coordinated whole-of-government approach to financial services reform.
The government has promised a series of regulatory changes as part of the so-called package of Edinburgh reforms, but many city officials want faster action. Some say we should create a defined contribution pension plan to invest some of our assets in early-stage companies.
Mayor Nicholas Lyons told the Financial Times last month that he had held talks with the Treasury about forcing pension funds to invest in the proposed £50bn growth fund.
“I would like to take 5 percent by force [every single DC pension] We will put it into that future growth fund,” he said, estimating that there is a pension pool of around £2 trillion available.
The Ministry of Finance said:
“This includes introducing a long-term asset fund structure and pursuing reform of pension regulatory fee caps to allow pension plans to invest in high-growth companies.”
Sir Nigel Wilson, head of insurer Legal & General, said this week that a long-term decline in equity investment by the pension sector was a key factor in companies’ “constant drift” out of London. warned.
He backed a compelling DC scheme to invest in infrastructure and growth stocks.
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