Tech belongs in London, says Lord Mayor of London NICHOLAS LYONS

The United Kingdom faces a dilemma. In the wake of Covid and in the midst of a cost of living crisis, how can we boost our economy, support business growth and revitalize the nation?

And how can we get the average Briton more money in their pockets in the coming years at a time when almost nine in ten members of DC schemes expect a shortfall in pension income?

I think the answer lies in our massive retirement ecosystem.

This week, the CEOs of organizations that manage many of the UK’s largest DC pension schemes signed the Mansion House Compact, committing them to allocate at least 5 per cent of DC assets under administration to unlisted companies by 2030. shares, which could release more than £50 billion. by the end of the decade.

The signatories – Aviva, Scottish Widows, L&G, Aegon, Phoenix, Nest, Smart Pensions, M&G and Mercer – represent approximately two-thirds of the DC market.

They will invest through existing investment vehicles or new ones. And that could be a vehicle like the Future Growth Fund, an idea I championed during my mayoral term.

With several top universities, the UK is one of the world’s most innovative countries. And innovation has been the main driver of long-term economic growth in this country.

But while we are good at getting start-ups off the ground, the UK lacks the deep pools of later-stage venture capital they need to accelerate, forcing them to turn to foreign capital providers.

We’ve seen high-profile tech companies start in the UK and eschew a listing on the London Stock Exchange in favor of New York.

So while the seeds of innovation are sown here, the fruits are reaped elsewhere.

I warned of this at the mayor’s banquet when I took office, suggesting that pension contributions should fill the funding gap.

Foreign pension funds invest 16 times more than domestic pension funds in UK venture capital and private equity.

At the Chancellor’s request, we have reached consensus on the idea of ​​DC pension funds investing more in unlisted equities.

Over time, the Compact will ensure that high-growth companies in sectors such as fintech and biotech can stay in the UK and scale up, support the development of sustainable infrastructure in areas feeling abandoned and pension incomes improve.

With a substantial fund, DC funds can share the risks and rewards while economies of scale reduce costs.

I understand why what we are doing has made some people think. But the asset allocation of default funds for the past 15 years is no longer fit for purpose, and savers need more exposure to real assets.

A sensible aversion to excessive risk-taking has probably developed into a full-blown allergy to anything remotely risky. And innovative companies and pension savers are suffering.

These funds will be invested by independent managers to deliver the best returns for savers by supporting unlisted companies in the growth economy.

Nothing changes if nothing changes. If we don’t take this relatively modest step, we’re shooting ourselves in the foot.

As we have worked with the Chancellor, I am pleased that the Shadow Chancellor, Rachel Reeves, has supported reform plans. Because whoever wins the next election will have to continue this work.