Fintech cash injection from Canadian pension fund revives calls for UK schemes to ‘step up’

Friday, March 11, 2022 11:50 a.m.

Tech and investment leaders have called on UK pension schemes to support UK growth companies

A cash injection from one of Canada’s largest pension funds into a London fintech company has rekindled calls for UK pension funds to ‘step up’ and support UK tech today.

The Ontario Teachers’ Pension Plan, which manages around $227.7 billion in assets, yesterday led a £210 million funding round in loanable consumer fintech through its platform. teacher innovation.

But tech leaders and venture capitalists say it’s time for UK pension funds to start imitating overseas pension funds by investing in high-growth UK companies, rather than letting profits go to waste. the stranger.

“It’s no surprise to see the rest of the world investing in our vibrant and innovative UK tech sector,” said Gerard Grech, chief executive of Tech Nation.

“We also need domestic investors to back UK tech with the same level of visible commitment, given the industry’s track record and global standing.”

Pension funds poured into UK tech would allow the sector to thrive and become an “investment engine for our own national economy”, Grech said.

UK pension funds have traditionally been excluded from such investments due to a cap on fund management fees, which generally prevents money from flowing into growing businesses via private equity firms and venture capitalists who charge higher fees.

The boss of the UK’s busiest investment firm, BGF, said it was time to loosen the cap to unlock institutional capital for UK pension schemes.

“We cannot just rely on international pension funds to support our growth – the UK needs its own pension funds to pick up the slack,” said Stephen Welton.

“There is an urgent need – and an opportunity – to channel more funding into growing businesses, and in doing so, create new jobs and improve our economic prospects.”

The UK currently has a growth funding gap of £15bn, according to the Scale Up Institute, and Welton said easing the cap could allow pension funds to fill the gap and enable the sector to thrive.

The government closed a consultation on whether to ease the cap on charges in January and is expected to deliver a verdict this year.

Overseas pension funds accelerated their push into UK private markets with Australia’s biggest pension scheme, AustralianSuper, saying in February it planned to invest £23bn in the UK and Europe over the next few months. next five years.

Dolores W. Simon