BVCA welcomes UK government's pension reforms

The UK private capital trade body, the BVCA, has welcomed an announcement – expected to be made by the chancellor later today – that will see Local Government Pension Scheme assets and defined contribution schemes consolidated into eight megafunds.

The announcement is set to be made by Rachel Reeves this evening at the annual Mansion House speech in the City of London.

BVCA Chief Executive Michael Moore said: “These reforms are a hugely welcome sign that the Government intends to take important long- term decisions to boost investment and growth.

“A minimum size threshold for Defined Contribution pension schemes will be a welcome move that allows UK pension savers to enjoy the benefits of scale needed to support better governance, investment expertise and the diversification of their portfolios.

“Larger, consolidated pension schemes have greater opportunity to invest in higher growth assets, like private capital funds that drive investment into exciting UK businesses whilst delivering strong-returns for pension savers. So, moving quickly from consultation to concrete proposals and implementation will be key.

“We strongly support greater, more effective pooling in the Local Government Pension Scheme. This should be a key source of capital for fast growing businesses and start-ups. It is also right that there should be provision to ensure that the LGPS can invest more in growing the UK’s regional economies.”

Ashish Patel, a Managing Director in Houlihan Lokey’s Capital Markets Group, said: “As the government advances its plans to consolidate local authority pension funds into ‘megafunds’ by 2030, this approach has the potential to unlock significant investment in high-growth UK businesses, infrastructure, and critical sectors.

“By consolidating and focusing disparate pension pots, investors would gain access to high-calibre growth opportunities that are often out of reach for smaller individual funds, but which could be effectively realised under a single, unified framework. Meanwhile, UK companies, particularly those in fast-developing industries, would benefit from patient domestic capital.

“Given the recent announcements suggesting a renewed focus on a cohesive UK industrial strategy, it’s clear that the high-tech industries of the future—life sciences, advanced manufacturing, digital technologies, and others—are precisely the kinds of fertile, innovative fields that would be best placed to drive growth and deliver attractive returns for UK pension investors.”