British technology leaders are backing pension reform proposals from Rachel Reeves that would consolidate Local Government Pension Schemes into eight “megafunds,” potentially directing up to £80 billion into investments for new businesses.
The initiative, scheduled for introduction via a new Pension Schemes Bill next year, aims to merge assets from 86 Local Government Pension Scheme authorities, modeling successful pension systems in Australia and Canada.
Leading tech organizations, including the Startup Coalition, Founders Forum, and Tech Nation, have outlined their support in an open letter to the Chancellor. They view pension reform as a critical governmental lever for achieving growth ambitions.
The push comes as traditional investment strategies focused on bonds and low-risk assets are increasingly seen as insufficient for meeting pensioner needs. The proposed reforms aim to redirect investments toward domestic innovation, stimulating new sector growth while offering pension savers potential returns from high-growth industries.
Government analysis indicates pension funds achieve more productive investment levels when controlling assets between £25-50bn, enabling more effective investment across diversified assets, including startups and infrastructure projects.
“Pension fund reforms represent a primary growth lever for the Treasury, and their implementation should result in substantial funding for the British venture-backed tech sector, benefiting both founders and British workers’ pensions,” said Dom Hallas, executive director at Startup Coalition.
The UK’s pension system is expected to manage assets reaching £1.3tn by 2030, with the Local Government Pension Scheme projected to control around £500bn in assets by decade’s end. Currently, these assets are managed across 86 different bodies, each overseeing between £300m and £30bn.
Marc Bouchet of TDK Ventures noted historical limitations in Europe regarding pension fund investments in venture capital, suggesting that once institutional investors prioritize risk-adjusted returns, venture capitalists can allocate funds in alignment with leading entrepreneurs.
