LONDON, Nov 21 (Reuters) - The British Business Bank (BBB) will set up a new fund for pension schemes and asset managers to invest in growth companies, part of wider reforms to unlock savers' cash to boost the economy, the UK finance ministry said on Tuesday.

Britain wants to encourage pension schemes to switch from a heavy focus on bonds and global blue chips to putting a portion of their cash in UK growth companies, a step it says would help improve returns for investors.

The move also aims to build up a stronger pipeline of potential company listings as the London Stock Exchange faces tougher competition from New York and, since Brexit, European Union financial centres.

UK Finance Minister Jeremy Hunt is due on Wednesday to present a budget that includes measures to implement his 'Mansion House Compact' announced in July.

Under the compact, 10 companies have voluntarily committed to investing 5% of their pension funds in small listed companies and unlisted growth companies by 2030.

The ministry said the measures Hunt will unveil on Wednesday will help invest the 'first tranche' of the 75 billion pounds made available through the Mansion House reforms.

The BBB will invest 250 million pounds to seed two investment vehicles under the UK's Long-term Investment for Technology and Science (LIFTS) initiative. Both will also be accessible to pension schemes and could attract over a billion pounds in total private capital, the ministry said.

The separate new growth fund at the BBB, a state-backed development bank, will draw on a permanent capital base of over 7 billion pounds, the BBB said in a statement.

"The Bank will now work closely with industry on the design of the investment vehicle before announcing further details in due course," the BBB said.

There will also be at least 50 million pounds of extra funding for the BBB's "Future Fund: Breakthrough" programme that provides direct investment to support promising innovative UK firms.

"Tomorrow’s Autumn Statement will be a huge step towards delivering our Mansion House Reforms and unleashing the full potential of our pensions industry," Hunt said in a statement.

(Reporting by Huw Jones; Editing by Christina Fincher)