Nordic pension funds are now investing more in UK start-ups than their British counterparts, research by Atomico has found.

As reported by our sister title, European Pensions, the State of European Tech report found that pension funds from Denmark, Finland, Iceland, Norway and Sweden collectively contribute USD 88m to UK start-ups, compared to USD 49m from the UK and Ireland combined.

In addition, the report found that generally UK pension funds only represent 5 per cent of funds committed to venture capital.

“Despite representing one of the biggest ecosystems in Europe, pension funds in the UK and Ireland only represent 5 per cent of pension funds committed to European venture capital in 2022,” the report stated.

“To put this further into scale, in 2022 UK and Irish pension funds committed a total of less than USD 200m to European venture funds, while Irish and UK tech companies themselves raised USD 31bn in that year, a sum several hundred times higher.”

There is currently a push by the UK government for British pension funds to support domestic tech companies for growth and better returns.

Chancellor Jeremy Hunt’s Mansion House reforms aim to generate growth across the UK as well as create stability by channelling pension funds into private equity, with UK pension managers such as Aviva and Legal & General, committing to allocating 5 per cent of their clients’ pension savings to the asset class by 2030.

Commenting on the findings, Senior Capital managing partner, Rudy Khaitan, said: “Chancellor Jeremy Hunt’s plan to consolidate workplace pension schemes and allocate up to £75bn of retirement funds for investment in high growth segments represents a strategic effort to stimulate the UK economy and generate better returns for pensioners.

“These reforms are expected to not only enhance retirement incomes by over £1,000 a year for typical earners but also drive substantial growth in the UK’s most promising companies.”

Source @PensionsAge