Pension pots worth billions of pounds could be invested in start-ups, infrastructure and green energy projects to help drive the economic recovery, the Treasury is currently discussing.
It has begun private talks with pensions bosses about unlocking some of the UK's £2.2 trillion in private workplace pensions to be invested in parts of the economy hitherto deemed out-of-bounds for savers.
The controversial scheme would be carried out through Chancellor Rishi Sunak's long-term asset fund, which he announced in November 2020.
Leaks from the talks suggest workplace pension funds could invest a portion of employees' savings in the new fund through a ‘default' investment option, meaning billions of pounds would be automatically channelled into the fund, with an option for workers to opt out.
The plan emerges as the Government searches for more capital to help the economy rebound after the pandemic, while wanting to discourage UK businesses from looking for investment abroad.
Concerns have been raised about how transparent the system will be to pension savers and the safety of investments, however.
But others see an opportunity in the policy, with an Investment Association spokeswoman claiming:
"With appropriate distribution rules, this would offer greater diversification for customers while also providing essential capital to support jobs and growth across the UK."
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