Britain’s largest retirement provider increases investment in UK defense

The UK’s largest long-term pension and savings provider has increased its investment in UK defense as the global economy faces the most dangerous geopolitical background since the Cold War.

Phoenix Group, the company that owns Standard Life is expected to announce a deal with three British companies within the next few weeks, giving the industry a significant boost.

The FTSE100 insurer, with more than PS280bn in assets under management, and 12,000,000 customers, has also announced that it will invest hundreds of millions more pounds into UK defense by the end decade.

Phoenix stated that it is in “active discussion” with a variety of British defence companies. The sector, Phoenix claimed, offers “attractive returns” in a time of increased geopolitical tensions.

The cash injection may also pave way for new investment in Britain’s defense industry, which was stifled by strict rules on environmental, social, and governance (ESG).

Some funds have been forced to avoid some of the largest companies in the industry including BAE Systems, QinetiQ and others.

Phoenix has already invested in BAE Systems bonds, but any new investments made by Phoenix are not expected to involve companies that manufacture weapons.

The money will be used to boost the domestic and economic security of the country through drone technology, artificial intelligence and cyber-security.

Mike Eakins is the chief investment officer of Phoenix. He suggested that Russia’s invasion in Ukraine was a turning point for the global economic system.

He said: “The past three years of events and the continued geopolitical tensions have shown that energy security, robust defence and economic resilience are essential components to reduce the risk of inflationary surprises.

“As part our diversified investments programme, we invest in the energy and defense sectors at scale and see these early stage growth companies as a way to increase investment.

They are attractive investment opportunities that can provide a high return on investment, and have tangible benefits for the UK in terms of energy security, infrastructure, defence and economic growth.

Sir Keir starmer warned this week that was “more volatile and dangerous” than before. He launched a review of Britain’s Armed Forces, which he claimed would ensure that Britain’s defenses are fit for the future.

The review will be headed by Lord Robertson who was the former Nato General Secretary. It will cover a range of topics from recruitment to agreements for international cooperation that will strengthen ties between continental Europe and the UK.

According to the current ESG regulations, both Britain’s Treasury and its investment industry declared that funds investing in UK firms making weapons were “ethical”.

The UK Defence Industry was declared ESG-compliant by the Treasury and the Investment Association in April. This association represents asset managers with more than £35bn  invested into UK defence companies.

But institutions such as the Church of England, have boycotted defense firms for ethical reasons. The Church of England has strict restrictions on its investments in arms and its £3bn Pension Fund has avoided more than 80 firms.

Sir Keir announced that he would increase Britain’s defense spending from the current Nato target of 2pc to 2.5pc.

Conservatives criticised the PM for not putting a date to when he would reach the goal. Rishi Sunak, Tory leader, had said that he would achieve this by 2030.

Just 11 out of the 32 members of the Alliance, including the UK last year, reached the target.