UK pensions backing new scale up fund
The UK’s largest pension funds are pooling resources to launch a £1 billion scale-up fund aimed at backing high-growth British businesses. The move is intended to boost innovation and regional economies while delivering stronger returns for savers.
The initiative brings together major institutional investors, including Railpen, Nest, and several Local Government Pension Scheme (LGPS) pools such as LGPS Central and LPPI. The British Business Bank is also involved, working alongside the group to support the launch of the fund and with the intention of investing in partnership with the group. The Office for Investment is also supporting the consortium as it explores the development of the fund.
The proposed UK Scale-up Fund would direct institutional money toward companies, founders, and venture managers driving innovation across the country. The goal is to help businesses commercialise new technologies, expand operations, and create skilled jobs while generating long-term returns for pension savers and strengthening local economies.
Related: Retirement plans get new approach
Prime Minister Andy Burnham said the fund demonstrated confidence in British business and talent. It would unlock good growth in every postcode, linking pension investments to entrepreneurs and technologies that could reindustrialise the country and create future jobs.
Chancellor John Healey described the effort as part of a broader push to make the UK the best place to start and scale a business. He noted that while the country creates great companies, it often fails to grow them with domestic capital. He said: “We have the third largest Venture Capital market in the world and this new £1bn fund will mean more British money to back British scale-ups and better returns for pension savers.”
Business, innovation, science and trade secretary Jonathan Reynolds called the involvement of major pension providers a significant endorsement of UK innovation. Investing in homegrown companies could drive long-term growth while allowing pension savers to benefit from their success.
Related: Pension systems face urgent need for reform
For pension funds, the initiative offers a chance to diversify portfolios while supporting economic development. Railpen, which manages assets for the railway industry’s pension schemes, said the project aligned with its focus on strong long-term outcomes for members.
Railpen chief executive Andy Bord described it as a compelling opportunity. Patient capital could help growing companies expand while delivering returns for savers.
Nest, which oversees pensions for over 14 million UK workers, shared this perspective. Nest chief executive Ian Cornelius said pension capital had a role in helping successful UK businesses access growth funding. He noted that attractive long-term outcomes for members could align with supporting innovation and job creation.
Related: EU reviews airline ownership rules
The LGPS pools involved have also supported the project. LPPI chief executive Chris Rule said the fund would allow pension schemes to generate sustainable returns while backing the next generation of British success stories. Collaboration, he added, would be essential, as the LGPS had already shown the benefits of pooling resources.
LGPS Central chief executive Richard Law-Deeks said the proposed fund could help bring together institutional investo
