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UK Private Capital has found that, despite commitments from UK defined contribution (DC) pension funds to increase allocations into venture capital and growth equity, there is limited evidence of any significant investment into the asset class – with firms describing it as difficult to engage with pension funds.

UK Private Capital’s Senior Policy Manager for Pensions, Karen Hurst, provides her insights on the passage of the Pensions Schemes Bill, following a long period of ‘ping-pong’ between the House of Commons and the House of Lords. Karen discusses compromises made to the mandation power, and positive changes to scale requirements and a value for money framework that UK Private Capital has long called for.

Harry Raikes, Head of UK Venture Investments at Schroders discusses the building momentum for UK pension reform over the last decade. Harry describes how the UK’s push to channel pension capital into high-growth companies is gaining traction, with early allocations to venture capital signalling a shift from policy ambition to practical implementation.

We are seeing a developing industry shift from focusing solely on cost to embracing long-term value and truly recognising the win-win proposition that stands before both the Venture Capital and Pension industries. This evolution is increasingly evident in how Pension Schemes are beginning to approach their investment decisions. The move towards a Value for Money framework is a welcome development. This framework is less about comparing fees and more about understanding the quality of returns over time for savers who depend on these funds for their retirement. Such an approach is vital if we are to create a truly sustainable investment landscape. 

The issue of getting more UK pensions fund investment into private capital is one the BVCA has long championed. However, it has become something of a hot topic in recent years, with both the last and the current Government increasingly seeing that it's a conundrum that, if resolved, provides solutions to two challenges keeping them up at night: the lack of UK growth and a pending retirement crisis.

Leaders from the pensions and private capital industries have issued new recommendations on how to facilitate UK DC pensions to invest in private capital, and how the Government can support this aim – boosting investment in fast growing British businesses and helping UK pension savers access potentially higher returns. 

This final report sets out the recommendations and key findings of the Pensions and Private Capital Expert Panel.This work builds on the Expert Panel’s interim report, published in September 2024. As highlighted in that report, the UK’s world-leading private capital fund industry offers a huge opportunity for UK DC pension savers to benefit from greater investment in the country’s innovative growth companies.

The Expert Panel’s interim recommendations call for a series of structural, technical and wider policy options designed to contribute towards better outcomes for UK savers in DC pension schemes and greater investment in high growth businesses in the UK. The recommendations are designed to assist industry, policymakers, regulators and other stakeholders to develop solutions to the public policy challenges of enhanced pension prospects and improved economic growth.

Retirement is unlikely to be front of mind for a Gen Z’er. Yet, as they take steps into the world of work, their auto-enrolment into a pension scheme will see cash put away to support their twilight years.