• Treasury should expand the Office for Investment remit to become a national investment broker linking investors to regional projects. 
• National Wealth Fund (NWF) should work with insurers on investment structure to unlock capital. 
• The National Infrastructure and Service Transformation Authority (NISTA) should work with the NWF and GB Energy to develop the UK’s infrastructure pipeline.

Phoenix Group, one of the UK’s largest long-term savings and retirement businesses, today launches its policy white paper, Unlocking Investment to Support the Net Zero Transition, calling for barriers to investments to be overcome by outlining a set of practical and fiscally neutral policy reform recommendations in four key areas.

Institutional investors currently face a range of barriers that limit their ability to deploy capital at scale. These include regulatory constraints, competition with bank financing, an insufficient pipeline of projects, a lack of investment-grade assets, and market uncertainty driven by shifting policy.  

Pension funds and insurers have capital to deploy at scale, if there is a strong pipeline of assets. The Mansion House Accord will see this capital flow into private markets as signatories have pledged to invest at least 10% of their DC default funds in private market assets by 2030, with a minimum of 5% directed toward the UK. Accelerating project development and ensuring the UK’s regulatory framework is aligned to growing the pipeline, will enable this flow of capital to support investment into UK productive assets.  

Phoenix Group’s report makes a number of targeted policy recommendations to overcome barriers, including:

1. Establish a national investment brokerage to increase connection between investors and regions. HMT should expand the Office for Investment remit to become a national investment broker between investors and regions across the UK 
2. Re-design NWF guarantees to include make-whole provisions. The NWF should offer periodic payments so that insurers can use the guarantee products the NWF offers, to better align with insurers’ regulatory requirements.  
3. Develop UK infrastructure pipeline: The National Infrastructure and Service Transformation Authority (NISTA) should work with the NWF and GB Energy to develop the UK’s infrastructure pipeline. 
4. Develop Sectoral Investment Roadmaps to provide investor certainty. DESNZ and HMT to lead cross-government development of sectoral investment roadmaps.

Bruno Gardner, Head of Climate Change and Nature, Phoenix Group, said: 

“The long-term savings industry is ideally suited to support the UK’s transition to net zero and greater energy resilience and to build more sustainable infrastructure. The long-term nature of our investments mean that our industry could contribute up to 50% of the investment required. However, there are still barriers that need to be overcome to unlock that potential. This paper sets out a number of non-fiscal reforms to do just that. If these reforms are implemented, Phoenix Group would be able to put more of our £290 billion of assets to work, backing green infrastructure, supporting the energy transition, and delivering better outcomes for both our customers and the UK economy.”

Rachel Solomon Williams, Executive Director or Aldersgate Group, said:

“Transitioning to a low-carbon power system is essential to strengthen energy security, deliver long-term economic growth, and enable decarbonisation across the real economy. The UK pensions and insurance sector has a critical role to play in this transformation, with the potential to contribute up to half of the required investment.. 

“The Aldersgate Group strongly supports the white paper’s recommendations which, if implemented, would remove regulatory barriers and unlock the sector’s full investment potential in driving the UK’s clean energy transition.”

This policy paper follows on the previous policy paper from Phoenix Group; Charting the UK’s Net Zero Future: Policy Recommendations to Unlock Investment.