UK savers are failing to benefit from the investment potential of domestic venture capital, Minister for Pensions Torsten Bell has said.
Speaking at the Pensions UK Investment Conference 2026 in Edinburgh, Bell said it was “simply odd” that British pension schemes are not investing in the growth available from the country’s start-up companies.
He claimed that Australian and Canadian pension schemes were ardent supporters of UK VC and called on the UK’s trustees to follow their lead.
“It is simply odd that UK savers benefit very little from the growth of our best companies. We estimate that 0.0001 per cent of UK and Irish pension fund assets are in VC. The UK produced 16 new unicorns in 2025, more than anywhere else in Europe, and that year is not a one off. Foreign pension funds want in; in fact, it’s hard to find a UK raise that doesn’t feature the Ontario Teachers’ Pension Plan,” Bell said.
Bell said The British Business Bank (BBB) which helps small businesses access finance, to start and scale up, reported top quartile returns for UK venture funds, outperforming the top quartile of every other private market asset class.
However, some of the UK’s largest pension schemes say the VC space does not provide enough projects of the requisite size to enable them to invest.
Dan Mikulskis, Chief Investment Officerat defined contribution provider The People’s Partnership, said: “When we look at UK VC it is more challenging to invest because of the size of projects, and we need to have conversations about suitable investment vehicles.”
The BBB British Growth Partnership Fund I, which includes commitments from Aegon UK, NatWest Cushon, and M&G has announced its first close of GBP200 million by the end of this month.
The fund is not our first but the first time they have created a vehicle for pension funds to invest in high growth UK companies and raised external institutional capital.
Leandros Kalisperas, Chief Investment Officer at BBB, says the fund plays an important role in helping larger pension schemes that are reticent to engage the time and effort in allocating smaller sums to VC, to access the market.
“When a pension fund is allocating to a new asset, they go through a journey. And while private equity or infrastructure and real estate are well trodden, venture capital is less so. We have to create choices for pension funds and give them an opportunity to decide how they want to play in this space.”
He added: “Given that venture can be quite a small allocation within a total pension fund, before you know it, it’s not worth making the investment. We have to create more vehicles and structures to help make it easier for pension funds and CIOs.”
The Pensions Minister noted that high fees charged by VC funds also act as a barrier to investment. However, he said trustees must look at returns rather than costs.
“There is an idea that fees are a barrier, and I appreciate that practice they do pose challenges, but I would just gently note that we as an industry can’t ask others to focus on net returns rather than costs while we repeat exactly the same mistake,” Bell said.
