The government’s plan to merge 87 local authority retirement funds to create one of the largest pension schemes in the world has raised concerns from former Treasury adviser Lord Jim O’Neill. O’Neill, who chairs the Northern Gritstone investment fund, believes that the merger could potentially undermine investment in innovative startups across the north of England.
O’Neill argues that the new big fund created from the merger may only be interested in backing large companies, neglecting smaller businesses spun out of universities in Manchester, Leeds, and Sheffield. He emphasizes the importance of preserving local knowledge and commitment to supporting local businesses, which may be lost in the new system.
Northern Gritstone, which backs over 20 businesses including a chip maker Pragmatic Semiconductor, relies on funding from individual local authority pension schemes. O’Neill’s concerns come amid a taskforce set up by Rachel Reeves to shake up the pension industry and potentially merge the individual pension schemes in the Local Government Pension Scheme (LGPS) covering England and Wales.
While Reeves aims to improve investment options and cut costs within the pension scheme, O’Neill warns that a merger could potentially hinder investment in startups like those supported by Northern Gritstone. The government, on the other hand, defends the planned reforms as a way to increase investment in a wider range of UK assets while reducing waste. The spokesperson also mentioned the possibility of legislating to mandate pooling if insufficient progress is made by March.
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