Jeremy Hunt, the British finance minister, is set to reveal long-awaited proposals on Monday aimed at incentivizing pension funds and other asset managers to invest in high-growth industries,

according to the Treasury. In his speech at the Mansion House in the City of London, Hunt will outline how these reforms can potentially boost returns for pensioners and provide capital for businesses.

The government's objective is to bolster the UK's sluggish economic growth without significantly increasing public debt. It aims to persuade pension schemes to allocate a portion of their funds to infrastructure projects, startups, and green technology.

However, the pensions industry has expressed opposition to mandatory investment quotas. The Treasury stated that any changes to investment structures would prioritize the needs of pension savers, seeking the best possible outcomes. Hunt was expected to announce a list of insurers and asset managers who have indicated their commitment to investing more in alternative assets.

In his speech, Hunt will address concerns about potential negative impacts on the government bond market due to efforts to secure funding from long-term investors like pension funds. He will emphasize the importance of maintaining a "strong and diversified gilt market."

Hunt's planned reforms to the pensions industry will be evolutionary rather than revolutionary, with a commitment to safeguarding the UK's competitive position as a leading financial center.

TheCityUK, a financial services lobby group, highlighted the need for government policies that encourage pension funds to invest in growth sectors, leading to higher returns. It pointed out that Australian and Canadian pension funds currently deliver better performance on average and urged the UK to follow their example, promoting consolidation of schemes and delivering improved retirements to support economic growth.

Hunt also reiterated his priority of curbing high inflation, stating that sustainable growth is unattainable without eliminating inflation, which hampers investment and erodes consumer confidence. He emphasized that he would not support significant tax cuts later this year if they worsened inflation, and he ruled out "inflationary" public sector pay awards in an interview with the Financial Times. Photo by Photographer: Andrew Parsons, Wikimedia commons.