Chancellor’s pitch to pension funds must be more convincing .
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Overview
DATE
16 Jul 2025
AUTHOR
Greg Smith

This insight piece first appeared in The Times.
Britain is a global research powerhouse. Our universities bristle with commercial potential. We are home to some of the leading thinkers on emerging industries - from quantum computing and robotics, to genomics and nuclear fusion. Yet we consistently fail to truly capitalise on our competitive advantages.
We cannot afford to find ourselves in a decade's time asking why we failed to act. We must take the necessary steps to grow UK businesses capable of leading the world and helping our economy thrive. Unlocking pension funds to back innovative private companies is one of those steps, and why the Mansion House Accord is fundamental to the UK’s economic future.
We must take the necessary steps to grow UK businesses capable of leading the world and helping our economy thrive.

Greg Smith
Chief Executive Officer, IP Group
Yesterday, the Chancellor delivered her annual Mansion House address. It marks the two-year anniversary of the first commitment from several of the country’s biggest pension funds to allocate five per cent of their savers’ capital to unlisted assets. Heralded as a watershed moment for UK pensions and a bold step toward mobilising domestic capital for national growth. The signal was strong, the mission clear.
Despite progress, the reality is sobering: capital flows for the UK’s most innovative firms have yet to materialise at the scale required. Just two per cent of defined-contribution schemes are currently allocated to UK private companies. And now in the current debate between investors, pension funds and the Government - the ultimate prize is in danger of fading from view.
The goal must be threefold. First, unlock vast reserves of institutional capital to address the chronic shortage of scale-up funding that continues to hold back Britain’s promising entrepreneurs. Second, offer pension savers a stake in the companies set to define the UK’s economic future. Finally, kickstart stalled growth, boosting productivity and national prosperity.
The Government’s call for pension funds to allocate at least five per cent to UK growth assets is not only rational but overdue. Savers receive generous tax relief on pension contributions, a benefit that helps offset risk.
It is my belief that this should come with some alignment between their investment and the national interest. Pension savers in the UK need sufficient returns to fund their retirement but they also need the UK to be a prosperous country in which to retire – one with thriving British employers and efficient public services, driven by modern technology and cutting-edge science. Well-funded, innovative, businesses will help deliver this.
Pension savers in the UK need sufficient returns to fund their retirement but they also need the UK to be a prosperous country in which to retire – one with thriving British employers and efficient public services, driven by modern technology and cutting-edge science. Well-funded, innovative, businesses will help deliver this.
Greg Smith
Chief Executive Officer, IP Group
Caution in the pensions industry is rational. Fiduciary duty demands prudence, and early-stage ventures carry risk. But the greater danger is inaction. Britain’s persistent failure to invest in its own innovation is not merely a missed opportunity, but with a 30-year low in IPO fundraising and major UK companies delisting or heading overseas in their tens every year, it is a mounting, economic liability.
Part of the problem is the Government’s pitch to pension fund managers remains too abstract. The case must be made more convincingly. What is needed is not rhetoric, but attractive investment opportunities that align with their duties to savers. That demands closer collaboration with experienced investors in unlisted technology firms - those who work with early-stage entrepreneurs every day, alongside the existing infrastructure, networks and track record to turn potential into performance.
IP Group, the organisation I lead, has been investing in science and innovation for over 20 years. Our investments in deep tech, clean tech and life sciences, including health tech, all aim to increase productivity, use energy and other resources more efficiently, and enable us to live longer, healthier lives. We’ve been championing the need for pension capital for years, and already count pension funds as some of our main backers, including Railpen and Phoenix Group. We have co-founded or supported more than 500 companies, taken four to billion-dollar valuations, and created over 10,000 jobs. This demonstrates that the opportunities are there – but it is just the beginning.
Increasingly, other firms are also stepping up. M&G and some local government pension schemes are investing in UK technology scale-ups - from Merseyside and Greater Manchester to the Local Pensions Partnership. In doing so, they are giving their members a stake in some of the country’s most dynamic opportunities and backing Britain’s ambition to lead the world in critical technologies.
What is needed now is increased scale and urgency. We must reframe the short-term risk profile with a clear-eyed view of the long-term gains for savers that come with a thriving economy, home to cutting-edge businesses that create jobs and solve major challenges. For pension savers approaching retirement in 2035, that distinction will determine whether they retire into a thriving, technology-led economy or one that exports its brightest ideas to overseas shareholders. I, for one, know which kind of country I want to eventually retire in and believe we can make this a reality.
