Key Takeaways
- • The UK government's Mansion House Accord, signed by major defined contribution providers, pledges at least 10% allocation to UK growth assets by 2030, yet pension venture capital activity remains limited so far.
- • The British Business Bank's financial capacity was expanded to £25.6bn by chancellor Rachel Reeves in June, and its British Growth Partnership has attracted interest from Aegon, NatWest Cushon and London CIV.
- • Several major DC schemes, including Nest, Smart Pension and The People's Pension, declined to comment on venture capital progress, while Railpen (£34bn) supports the government's aims but warns against prescriptive mandates.
- • Industry experts from Isio and Hymans Robertson say cost concerns, trustee unfamiliarity with venture capital and weaker performance of UK funds relative to US counterparts remain barriers.
Summary
The UK government has pressed pension schemes to direct more capital into domestic growth assets, with the Mansion House Accord committing major defined contribution providers to allocate at least 10% to such assets by 2030, according to Pensions Expert. Despite this push, Pensions Expert reports that there has been little initial activity from pension funds in venture capital. When the publication contacted several major DC schemes, none commented on venture capital progress. Nest, Smart Pension, The People's Pension and other Mansion House Accord signatories also politely declined to comment. Smart Pension has previously announced plans to allocate as much as £4bn to private markets over the next few years, including venture capital.
Venture capital is a central element of the government's ambitions. In June, chancellor Rachel Reeves expanded the British Business Bank's financial capacity to £25.6bn. The bank's British Growth Partnership has attracted interest from Aegon, NatWest Cushon and London CIV.
Railpen, a £34bn multi-employer scheme, supports the government's plans but cautions against prescriptive approaches. Head of UK productive assets Julia Diez said investment must be balanced with scheme characteristics and fiduciary duty rather than mandation, and that the wider UK ecosystem, including public equity and listing rules, must be considered. John Greaves, Railpen's director of fiduciary management, called for a holistic view of the investment ecosystem and an adequate supply of investable assets.
Industry experts identify several barriers. Helyne Slade of Isio said UK venture capital has delivered reasonable average returns, but the best funds have lagged US counterparts, and that cost has pushed private assets to the margins. Alison Leslie of Hymans Robertson said venture capital is often an unfamiliar area for trustees and called for more hands-on engagement. Early-stage investing also carries high failure rates and requires broad diversification and sector expertise.
Venture capital is a central element of the government's ambitions. In June, chancellor Rachel Reeves expanded the British Business Bank's financial capacity to £25.6bn. The bank's British Growth Partnership has attracted interest from Aegon, NatWest Cushon and London CIV.
Railpen, a £34bn multi-employer scheme, supports the government's plans but cautions against prescriptive approaches. Head of UK productive assets Julia Diez said investment must be balanced with scheme characteristics and fiduciary duty rather than mandation, and that the wider UK ecosystem, including public equity and listing rules, must be considered. John Greaves, Railpen's director of fiduciary management, called for a holistic view of the investment ecosystem and an adequate supply of investable assets.
Industry experts identify several barriers. Helyne Slade of Isio said UK venture capital has delivered reasonable average returns, but the best funds have lagged US counterparts, and that cost has pushed private assets to the margins. Alison Leslie of Hymans Robertson said venture capital is often an unfamiliar area for trustees and called for more hands-on engagement. Early-stage investing also carries high failure rates and requires broad diversification and sector expertise.
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