Pensions giant to create UK superfund in boost for Hunt

Smaller funds traditionally do not have the financial firepower to tap into these investments because of the higher costs charged by venture capital firms.

However, by handing over cash to the Phoenix fund, it is possible that even the smallest of Britain’s 27,000 workplace pension schemes will have access to these investments.

This idea has been partly inspired by similar investment funds in Australia, such as IFM which specialises in infrastructure investments.

Mr Hunt has announced he wants to boost returns for savers while directing more cash towards productive, higher-returning assets under plans first announced in last year’s Mansion House speech.

He claimed the reforms could boost individual pension pots by up to £1,000.

However, some pension funds openly warned the Chancellor against mandating UK-based investment, which they say could reduce investor returns.

Phoenix is said to be aiming for around 40pc of UK-focused investment as part of its Mansion House commitment, but sources suggested this was not a target and the focus would be on returns over location.

Britain’s largest local government pension scheme is also understood to be plotting a new UK-focused fund as part of a new £2bn investment drive into private markets.

Border to Coast, which manages the pension pots of local government workers from Bedfordshire to Teesside, will invest hundreds of millions of pounds of this pot into UK infrastructure, private equity and private credit over the next year. This will be achieved through a new “UK Opportunities” fund focusing on British assets.

Border to Coast is the largest local government pension scheme in the UK with just under £60bn in assets. Its new UK Opportunities fund will target projects including housing, transport and renewable energy, all of which money managers said would benefit UK communities.