[ad_1]
Mr Hunt has claimed that his compact with pension funds could help to boost retirement incomes by over £1,000 a year for a typical earner over the course of their career.
The Chancellor said: “British pensioners should benefit from British business success.
“This also means more investment in our most promising companies, driving growth in the UK.”
However, the Government’s own internal modelling suggests the very high fees charged by private equity firms could erase returns for pension savers.
High performance fees could even leave savers who invest in private companies £1,300 worse off, Department for Work and Pensions analysis showed.
Mr Fawcett insisted Nest did not pay performance fees “as a point of principle”.
He added: “All investment fits within our existing fee structure. This competitive fee structure also increases the probability that any net investment returns will meet our objectives.”
Why we’re investing Britain’s pension pots in solar farms and fish and chip shops
By Mark Fawcett, chief investment officer of National Employment Savings Trust (Nest)
The Chancellor’s Mansion House speech back in July generated a lot of interest within the pensions industry. Particularly the signing of the Compact by major UK defined contribution (DC) investors to commit 5pc of their portfolios to investing in unlisted equities.
There are questions from some quarters about whether UK DC schemes could, or even should, be investing in unlisted equities.
As a signatory to the Compact, our view is simple – we don’t want Nest members missing out on an asset class which is so highly sought after.
There’s a good reason private equity features in large pension schemes around the world. Average historic returns in private equity, broadly speaking, have been significantly higher than for listed equity over most time horizons.
At Nest, we’ve considered a wide range of factors and data to support our decision to invest in private equity because clearly, if we can achieve at least the average return, this will enhance the scheme’s total returns.
We’ve focused on growth-stage firms, as well as small and mid-cap buyouts, as these are the areas which we believe will deliver the highest risk-adjusted returns.
Since 2022, when we started investing in private equity, we’ve put money into a range of companies across industries.
One example is Captain D’s, a chain of seafood restaurants bringing a soul food take on the British classic of fish and chips for its American culinary audience. It’s been operating for 50 years but last year looked for further investment to help continue expanding its business.
Another deal Nest entered is in Sekhmet, the Indian pharmaceutical company, which is one of the world’s largest suppliers of generic drugs. Both very different companies, but both exciting investment opportunities.
Private equity assets bring an attractive combination of less volatile valuations and higher expected returns than their liquid counterparts. This combination is naturally desirable for any long-term, institutional investor.
[ad_2]
Source link