Government advisor Sir John Bell says pension funds should be merged to create “super funds” for science and technology start-ups.
Bell, a professor of medicine at the University of Oxford, believes the new funds would help stop the flow of UK technology and life sciences start-ups choosing to float or find investment overseas.
The UK has its sights set on becoming a science and technology superpower. However, there has been a steady stream of UK companies looking to list on Nasdaq in the US instead of the London Stock Exchange – which Bell told The Times has “largely fallen off a cliff.”
A Treasury consultation on how to funnel pension fund investments into the sectors ends next week, meanwhile the Pensions and Lifetime Savings Association is due to meet with Government this week to discuss the proposals.
Pension funds are invested in venture capital in countries such as Canada, the US and Australia, but not currently in the UK.
The idea of recreating the process in the UK has been in development for some time. In September 2021, then chancellor Rishi Sunak said that the key to technology investment lay in the hands of pension holders.
In December last year, Labour’s shadow chancellor Rachel Reeves then launched a start-up review led by Lord Jim O’Neill exploring the plan to link pension funds with venture capital firms.
David Mott, co-founder of Oxford Capital – an investor in life sciences start-ups – welcomed those plans at the time. “The UK lags many countries in Europe and especially the US in that there is very little support for venture capital from pension funds,” he told Growth Business in January. “VCs are performing as well as private equity so it’s a much more established asset class and it won’t go away. I think it’s important pension funds do harness and tap into the potential of the ecosystem in the UK.”