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LONDON — “A grand don’t come for free,” as the Streets famously sang. But if Chancellor Jeremy Hunt gets his way, young U.K. workers could earn an extra £1,000 a year when they retire, the Treasury claims.

At London’s Mansion House this evening Hunt outlined plans to boost pension fund investment in U.K. tech companies, with the biggest funds committing to put 5 percent of schemes into unlisted shares.

Detailing in the annual speech how he wants to create the “world’s next Silicon Valley,” Hunt said the U.K. was in a “perverse” situation where British investors were investing less in the country’s high-growth companies than international pensioners.

To reverse that, he outlined the “Mansion House Compact” which commits nine of the biggest defined contribution schemes to invest at least 5 percent of their funds into unlisted equities by 2030.

That could unlock £50 billion of investment into high-growth companies, the chancellor said.

The Treasury claimed the package of reforms could help increase pension pots for an average earner who starts saving at 18 by 12 percent over their career, worth £1,000 more a year in retirement.

Signatories include Aviva, Scottish Widows, L&G, Aegon, Nest and Smart Pension.

Full policy plans will be outlined in the autumn statement, along with a consultation on doubling local government pension schemes investment in private equity to 10 percent. The government claims that could unlock another £25 billion.

Hunt has also asked the British Business Bank to look at whether the government should play a bigger role in setting up investment vehicles. 

The U.K.’s tech industry has long argued that home-grown pension funds are too risk averse and they have to go abroad to find investors. 

Executive director of the Startup Coalition, Dom Hallas, said: “Encouraging U.K. pension funds to deploy more capital into private markets including VC-backed startups is truly the white whale of British tech policy. The Treasury deserves huge credit for building a framework to support it — now we just have to ensure the money is deployed.”

Brent Hoberman, executive chairman of the Founders Forum, added: “This should be welcome news to the U.K. industries of the future, their ability to attract more capital will create more national champions.”

But the plans, which were trailed in the media last week, had faced backlash from pension funds who initially warned against making the scheme mandatory amid fears that pensioners could risk losses and concern about the creation of asset bubbles. They have since voluntarily signed up.

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