By Iain Withers and Sinead Cruise

LONDON (Reuters) -Major British pension funds pledged on Tuesday to pump up to 50 billion pounds ($66 billion) of additional investment into UK businesses and infrastructure, as the government leans on private capital to fund public projects and boost growth.

Seventeen investment firms, including Aviva, Legal & General and M&G, said they would invest up to 10% of their pension portfolios in infrastructure, property and private equity by 2030, according to a government statement. Half will be ringfenced for UK assets.

Tens of millions of workplace pension scheme members will now see more of their savings invested in higher-risk, potentially higher-reward assets like early-stage businesses and green energy, alongside stocks and bonds.

Ordinary savers and their pension fund managers will compete head to head with private equity and specialist investment firms in a market investment data firm Preqin estimates will exceed $30 trillion by 2030.

Chancellor of the Exchequer Rachel Reeves said in a statement the "bold step" by Britain's biggest pension funds would deliver growth and give working people greater financial security in retirement.

The new Mansion House Accord doubles a 2023 target to invest 5% of pension pots in productive assets and broadens the range of applicable assets.

"We have long-believed that UK pension savers should benefit from exposure to the higher returns provided by private markets," António Simões, Group Chief Executive Officer of L&G, said in a statement.

Other participating funds include the Universities Superannuation Scheme, the National Employment Savings Trust and The People's Pension.

Signatories to the accord are expected to gain improved access to the British Business Bank's pipeline of UK venture capital opportunities, after the Financial Conduct Authority approved the launch of the lender's British Growth Partnership.

INCENTIVES NOT MANDATES

The pledges agreed on Tuesday are currently voluntary. But the government said it would monitor progress against the commitments, which will be reinforced by further measures in an upcoming pensions review.

The Financial Times and other media have reported that the government is considering forcing pension funds to invest more in UK projects, worrying some executives who argue such a move would not be in the best interests of clients.

"We believe the most sustainable solution lies in creating the right incentives, not mandates," a spokesperson for one of the signatories, Phoenix, said.

Britain's finance ministry was not immediately available for comment.

A YouGov survey of 1,563 UK pension savers commissioned by workplace savings and pensions fintech NatWest Cushon showed 52% of respondents agree that pension funds should invest more in the UK.

($1 = 0.7577 pounds)

(Reporting by Iain Withers and Sinead Cruise; Editing by Andrew Heavens and Joe Bavier)