Nick Lyons, the former Lord Mayor of London and current Chair of  Phoenix delivered a keynote to the Equity Release Summit yesterday in which he called for Labour to target its proposed National Wealth Fund at delivering a funded state pension by 2075.

Commenting on Rachel Reeves’ speech in New York in which she announced that Labour were considering setting up a vehicle, similar to a sovereign wealth fund, investing in British growth, Lyons pointed out that such a fund needed an ultimate objective.

A fifty year plan

Questioned from the floor, Lyons repeated that he had discussed these proposal with those close to the Shadow Chancellor and that Labour were “very interested”.

If the proposal were to be implemented it would mean that speculation about the future of the State Pension would be based, not on the willingness of future Governments to meet the promises of their predecessors, but on the performance of the UK economy over the next five decades.

Lyons called on Labour to establish the fund as the Sequoia Capital of the British finance industry, with a purpose everyone could agree upon.  Sequoia provides early and later stage capital to the American Technology sector and is largely credited with the boom in American and particularly Californians tech-stocks.

Lyons said that such a National Wealth Fund would  make available  a huge capital reservoir for inward investment into listed and unlisted British stocks. He pointed out that Ontario Teachers pension fund was now 50% invested in unlisted stocks, it turned out that representatives from Ontario were in the room.

Lyons criticised the asset allocations of UK pension funds for being negative on growth and focussing on unproductive asset classes such as Government and Corporate Debt. While he did not directly criticise regulations, he made it clear that pension funds were constrained in what they could do

He pointed out that our big pension schemes currently only invest 4% into UK equity markets,  a national wealth fund could be funded by these pension schemes which  could also give the lead for overseas investors to follow with their money.

The link to property

Earlier in his speech , Lyons had commended former pensions minister Chris Pond on his work with the Equity Release Council , pointing out that he has presided over the two largest “stores of value” in the UK, residential property and pensions.

Unlocking the potential of the UK residential housing stock is the job of equity release and Phoenix (trading as Standard Life) were represented at the Conference. According to the Equity Release Council’s CEO, less than 2% of the available property market , has been reached.

Lyons pointed out that similarly , not much of the £4tr invested in UK pensions had found its way into productive assets. This despite the Mansion House reforms and the Compact that Lyons had been instrumental in delivering.

Missed opportunities by the current Government

Lyons went on to lament missed opportunities by the current Government , especially in moving  the funding of auto-enrolment towards 12%. Lyons said the Government had – “missed a trick”  by failing to introduce reform as part of the large wage settlements over the last year.#

He criticised the lack of fiscal incentives for large institutions to inwardly invest into listed UK companies , pointing out that the UK had the second highest level of stamp duty in world (behind Ireland) . He pointed out that there is currently no stamp duty to pay on buying and selling Crypto or ETFs

He questioned the incentivisation of  a cash ISAs  which account for £300bn out of £800bn in assets and he supported the strengthening of the GB ISA.