Game-changer: Gov't to revise investment limits on pension funds

Wednesday, November 21, 2018

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FINANCE Minister Dr Nigel Clarke yesterday said that the Government will revise the investment limits placed on pension funds, a move that will make more than $20 billion available for investment in venture capital, which the funds are currently restricted from doing.

“When we move the limit from zero to five per cent, based on the $550 billion in pension funds, over $25 billion in capital will be available for investing in venture capital. That is a game-changer for innovation, for opportunity, and for growth,” Dr Clarke said.

The move represents one the Economic Growth Council's policy prescriptions outlined in its Call to Action document released two years ago.

Yesterday, Dr Clarke, in an address to the Compete Caribbean Partnership Facility's dialogue on unleashing innovation in Jamaica at the Courtyard Marriott Hotel in New Kingston, said that the institutional capital available to pursue growth-inducing, risk-taking activities is severely limited.

“There is great need to expand access to capital to those who are committed and motivated to pursuing their innovations. For that reason, we are going to change the investment limits for pension funds so that they can invest in venture capital,” he said, adding the move is important for unleashing and expanding innovation and entrepreneurial activity in Jamaica.

He noted that in the context of entrenching macroeconomic stability, where the Government of Jamaica is pursuing low, stable and predictable inflation, it is no longer possible to satisfy pension liabilities by investing in government bonds.

“As such, we are going to have to take risks, and so we are going to allow pension funds trustees to take risks,” he said.

Clarke said that investing in people, expanding the application of knowledge, changing aspects of the culture with respect to risk-taking, and increasing access to finance are critical to supporting Jamaica's innovation ecosystem.

“Jamaica is hitting the ground running as there is innovation, enterprise, and discovery already taking place,” he said.

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