The UK’s largest pension providers have launched a new partnership, designed to drive funds into regional investment opportunities.
This Sterling 20 group, is supported by 20 pension providers and insurers and has seen an initial commitment of £2bn by 2030 from L&G to invest in affordable housing.
Nest will also provider Schroders Capital with a £100m, ringfenced fund for UK investments, as well as investing £40mi to deliver gigabit-capable fibre broadcast to remote areas in Scotland and Northern England.
This new group will be formally established at the Regional Investment Summit in Birmingham on Tuesday, and will work with the Government and City of London Corporation to channel investment into infrastructure and fast-growing businesses in key growth sectors, such as AI and fintech.
This Summit will see the Chancellor, Rachel Reeves meet with UK pension providers and also representatives of some of Australia’s biggest private assets fund managers.
This includes AustralianSuper, Australia’s largest pension fund and 17th largest in the world, increase its investment into the UK housing market. Ahead of the Summit AustralianSuper has announced a new UK living investment platform, dedicated to investment in rental homes as part of its ambition to invest £8bn of new capital into the UK over the next five years.
This partnership and greater contact with Australia investors is part of the Government wider efforts to drive economic growth, particularly in the regions
Announcing this latest partnership Chancellor of the Exchequer Rachel Reeves says: “Our country’s pension funds are some of the biggest in the world. When they invest in Britain, everyone benefits – from the construction worker on site, to the small business on the high street, to the saver seeing their pension grow.
“Sterling 20 shows what can be achieved when we all pull in the same direction to build a stronger economy that works for, and rewards, working people.”
The move has been welcomed by many across the industry. Legal & General group chief executive António Simões, says: “As a long-term investor in the UK economy, L&G has a proud history of using pension capital to develop assets that deliver strong financial returns and lasting social impact.
“Our £2bn commitment, targeted at housing, infrastructure, and urban regeneration, will help unlock the investment needed in productive assets across the country – creating jobs, strengthening communities, and driving both regional and national growth.”
Nest CEO Ian Cornelius adds: “Every decision we make puts our members and their long-term outcomes first. We believe private assets can play a key role in delivering strong, consistent returns for them.
“That’s why the UK, with its exceptional investment opportunities, is a cornerstone of our strategy. From major infrastructure projects to ambitious small businesses, our investments are helping support economic growth across the country. We have already committed around £4bn to UK private markets, and by 2030 we expect this to rise to around £12bn. A strong pipeline of opportunities will be essential to realising this growth for the benefit of our members and the UK economy.”
Damian Moloney, deputy chief investment officer at AustralianSuper adds “As the launch of our new £500m UK Living Platform demonstrates, AustralianSuper continues to view the UK as a key global investment destination. With the fund on track to grow its UK assets to £18bin by 2030, we look forward to further facilitating investment between the two countries for the benefit of members.”
Patrick Heath-Lay, chief executive officer for People’s Pension added: “We are delighted to be able to support this very important initiative, which seeks to identify a continuous pipeline of projects for major pension schemes like ours to invest in for the benefit of our members. Earlier this year, we previously outlined our ambitions to invest at least £4bn of our growth pool fund in private markets, including a significant proportion in UK assets and subsequently signed the Mansion House Accord. We did this because we believe it will improve retirement outcomes for our members, who live and work in every corner of the country.”
However consultants said they wanted to see such initiatives used to wider the investment opportunities in private markets. LCP partner Stephen Budge says: “It’s great to see further commitments being made to invest in the UK. However, we need to be careful that UK pensions don’t just aim to fix UK Plc problems; the focus must be on driving opportunities for global growth. These commitments, coordinated by the Government, are increasingly focusing on property and infrastructure, which are very UK-centric needs and opportunities. After all, we do love our homes, and this does little to increase the UK’s development of global businesses of the future.
“The Government agreed to a number of ‘critical enablers’ as part of supporting the Mansion House Accord 2030 targets, which included ‘a pipeline of UK investment opportunities’. Let’s hope we see support for growth in a wider range of asset class opportunities.”
ABI director feneral Hannah Gurga adds: “Our pension sector is a powerhouse for driving growth. Collaboration is key to unlock the industry’s potential to the full, and the Sterling 20 is a bold step towards achieving this ambition. Savers interests must always be at the heart of investment decisions, but with a co-ordinated approach we can work together to support a stronger economy today and savers’ futures tomorrow.”
