National Wealth Fund: Pension fund chiefs meet chancellor
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Pension fund executives have met with the chancellor in Downing Street on Tuesday as part of a taskforce to help set up a £7.3bn National Wealth Fund. The fund will aim to attract private investment to support the green transition.
Chief investment officer of Brunel Pension Partnership, David Vickers met with chancellor Rachel Reeves and energy and net zero secretary Ed Miliband on Tuesday along with other members of the taskforce, which includes Carol Young, the CEO of the Universities Superannuation Scheme. The independent group is chaired by the Green Finance Institute’s chief executive Rhian-Mari Thomas.
“Building a green economy requires a step-change in coordination between the government and investors, so that the policy and regulatory environment is truly enabling for long-term investors,” said Vickers. “The National Wealth Fund comes at a crucial moment in the political cycle to help set that course.”
Brunel sees engagement between government and investors as key to achieving net zero. “We have engaged with parties on both sides of the political divide, as we have with different governments,” it said.
It calls for a “stable, long-term, and competitive policy environment” to mobilise private capital, and for the fund’s operational independence from government, which should however give it a “clear mandate” to ensure alignment.
The taskforce recommended an independent board and investment committee, “with credibility and track record in the market”, and did not skirt the thorny issue of pay – which local government asset pools sometimes wrestle with – stating: “The case will need to be made for a relaxation of public-sector pay and procurement constraints to attract professionals of sufficient experience and calibre.”
Its first investment recommendation is that while the fund will have a higher risk appetite, “this won’t mean only targeting first loss positions and below market rates of return. Instead, it means identifying risks the NWF is uniquely capable of managing”.
It stressed that “these investments need to succeed if private capital is to support subsequent deals in the same sector”.
Asset classes considered should go beyond equity, the group recommended, and private capital should be sought on a deal-by-deal basis rather than at fund level.
To speed the fund up, an existing organisation, such as the UK Infrastructure Bank, should initially manage and deploy the fund’s capital, the taskforce said.
Is your pension fund planning to look at investing in net zero sectors alongside government?
