Pension reform could boost Irish venture capital

Finance Minister Paschal Donohoe TD told the Scale Ireland autumn gathering in Dublin on 4 September that he is weighing several measures in Budget 2026, including pension fund reform, simplification of tax incentives, and targeted funding mechanisms, to address the domestic venture capital shortfall. He said the imminent launch of auto-enrolment represents a critical juncture for the pension sector and an opportunity to consider what the reform means for start-up funding. Donohoe acknowledged the complexity of existing support schemes such as EIIS and R&D tax credits, and said EU compliance requirements contribute to that complexity, with consultations underway to reduce regulatory burdens while preserving single market benefits.

Scale Ireland chair Brian Caulfield cited the US, where pension funds allocate about 2% of their assets to venture capital, and said European investment funds allocate close to zero. He argued that even a small increase in pension savings directed to high-growth indigenous companies would materially expand available capital without cost to the Exchequer. Caulfield said France, the UK and Denmark are already moving in this direction.

During a panel discussion, Debbie Rennick, general partner at ACT Venture Capital, said Ireland lacks the capital to support companies through their full life cycle and that larger funding rounds are needed for firms to compete globally. She said the country must reduce early exits and stop companies downsizing or relocating to the US, and that Irish pension funds currently have no meaningful access to venture capital. Rennick noted the Irish venture capital industry was originally formed more than 40 years ago to channel pension funds into Irish businesses.