UK pension funds and other institutional investors should join other countries’ investors benefiting from British infrastructure and other long-term investments and rely less on the stock market, said Prime Minister Boris Johnson and Chancellor of the Exchequer Rishi Sunak in a recent open “challenge letter”. Currently global investors, including pension funds from Canada and Australia, are benefiting from the opportunities that UK long term investments afford, while UK institutional investors are under-represented in owning UK assets – more than 80% of UK defined contribution plans are mainly in public securities that represent only 20% of UK assets. The UK government’s strategy for recovering from the COVID-19 crisis includes a 10-point plan for a “Green Industrial Revolution” and a new UK infrastructure bank to co-invest in green infrastructure. In September, it plans to issue the first green gilt for institutional investors to help fund the government’s green commitments, and this autumn plans to unveil a new vehicle for long-term investment, the Long-Term Asset Fund. The UK – UAE Sovereign Investment Partnership investing £1 billion ($1.4 billion) in science-based technology sectors could be a model for other investment funds, they said in the letter. “To seize this moment, we need an Investment Big Bang, to unlock the hundreds of billions of pounds sitting in U.K. institutional investors and use it to drive the U.K.’s recovery,” Messrs. Johnson and Sunak wrote. Short of mandating more investment, “the government is doing everything possible to encourage a change in mindset and behaviour among institutional investors, and we remain open to addressing further barriers where they are identified,” they said.

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