Reform UK has a bold plan to attract Wall Street-level talent to run a new national investment fund - by offering Wall Street-level pay.
Under the proposal, top managers could earn between £2 million and £5 million in total compensation, blowing past the Prime Minister's £174,000 salary. Even base pay for fund staff would range from £250,000 to £400,000 before performance bonuses kick in.
The idea is simple: if you want the best financial minds steering a massive national portfolio, you have to compete with private sector pay scales. Norway's sovereign wealth fund, often seen as the gold standard, paid its top managers 13.5 million kroner ($1.5 million) last year.
Where would this fund get its cash? Reform wants to combine Britain's scattered local government pensions into one £500 billion pot. Those pensions currently hold £400 billion across 6.9 million members.
The party claims centralizing management could reduce annual costs by roughly £2 billion currently spent on external investment fees. Keeping management in-house would allow savings to stay within the fund, with staff motivated to maximize long-term growth.
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Former Pensions Minister Steve Webb explains: "A sovereign wealth fund is essentially just an investment fund - you grow it, you invest for the very long term, and you take a fair amount of risks... it's doing a different job basically."
Not everyone is convinced. Most sovereign wealth funds, like Norway's, start with oil or mineral profits - not pension savings. Critics argue merging retirement money into a national investment vehicle introduces new risks.
There's also the question of whether high salaries guarantee high performance. Paying £5 million might lure talent, but it doesn't automatically mean better returns for pension holders.
Richard Tice is expected to highlight this proposal during his keynote at Reform's upcoming business conference. The plan underscores how governments entering financial markets face talent wars like private firms - but under far greater public scrutiny.
If implemented, this could transform UK pension investments. A £500 billion fund would wield significant influence over British asset prices.
For now, it's a proposal sparking debate: as state-backed funds grow, what's the right balance between competitive pay and public accountability? With retirement savings involved, the margin for error is razor-thin.
