Key Takeaways
- • The Pensions and Private Capital Expert Panel has recommended a new government-backed programme to channel UK defined contribution (DC) pension schemes into venture and growth capital funds, addressing a significant structural gap in private capital investment accessibility.
- • The proposed framework includes three core components: Nova (New Opportunities for Venture and Growth Acceleration)—modeled on France's Tibi Scheme—a Fund of Funds investment vehicle building on the British Business Bank's British Growth Partnership, and a private capital directory acting as a searchable "shop window" for DC schemes to evaluate managers.
- • The expert panel, established in February 2024 to advance the Mansion House Compact and Investment Compact for Venture Capital and Growth Equity, emphasizes that regulatory barriers currently limit DC pension investment into UK private capital and require urgent government action.
- • The proposed private capital directory would accelerate deal flow by improving information transparency and reducing transaction friction between DC pension schemes and specialized private capital funds focused on strategically important sectors.
- • Government endorsement and profile-raising of the programme, coupled with continued British Business Bank support, is positioned as essential to scaling DC pension participation in private capital markets.
Summary
The Pensions and Private Capital Expert Panel has called for the UK government to establish a comprehensive programme designed to substantially increase private capital investment from defined contribution pension schemes. The recommendation emerged from the expert panel's work on the Mansion House Compact and Investment Compact for Venture Capital and Growth Equity, established in February 2024 to address structural underinvestment by DC schemes in venture and growth capital.
The proposed programme comprises three integrated initiatives. First, Nova (New Opportunities for Venture and Growth Acceleration) would create a market of private capital funds specially accredited for DC schemes, modeled on France's successful Tibi Scheme. This accreditation framework would enable pension schemes to confidently invest in funds focused on strategically important sectors without navigating complex individual due diligence. Second, a new Fund of Funds investment vehicle would build on the existing British Business Bank's British Growth Partnership, providing DC schemes with indexed access to returns generated by smaller private capital funds that might otherwise remain inaccessible due to minimum investment thresholds or operational complexity. Third, a private capital directory would function as a dedicated "shop window," containing standardized key facts and information on specific private capital firms and funds available to UK DC schemes, substantially reducing information asymmetries and accelerating investment decision-making.
The expert panel's report underscores that current regulatory frameworks present material investment barriers limiting DC pension participation in private capital. The panel has urged the government to provide both formal endorsement of the proposed programme and regulatory urgency in removing these structural constraints. Continued support for the British Business Bank and development of new partnerships within the private capital ecosystem are identified as critical success factors.
The proposed programme comprises three integrated initiatives. First, Nova (New Opportunities for Venture and Growth Acceleration) would create a market of private capital funds specially accredited for DC schemes, modeled on France's successful Tibi Scheme. This accreditation framework would enable pension schemes to confidently invest in funds focused on strategically important sectors without navigating complex individual due diligence. Second, a new Fund of Funds investment vehicle would build on the existing British Business Bank's British Growth Partnership, providing DC schemes with indexed access to returns generated by smaller private capital funds that might otherwise remain inaccessible due to minimum investment thresholds or operational complexity. Third, a private capital directory would function as a dedicated "shop window," containing standardized key facts and information on specific private capital firms and funds available to UK DC schemes, substantially reducing information asymmetries and accelerating investment decision-making.
The expert panel's report underscores that current regulatory frameworks present material investment barriers limiting DC pension participation in private capital. The panel has urged the government to provide both formal endorsement of the proposed programme and regulatory urgency in removing these structural constraints. Continued support for the British Business Bank and development of new partnerships within the private capital ecosystem are identified as critical success factors.
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