Andy Burnham's £1B Pension Fund Explained: What It Means for UK Savers and Startups

Britain has long been home to innovative science and technology businesses. The government says it now wants more of those companies to secure the funding they need to expand in the UK rather than looking elsewhere for growth capital. That ambition sits behind plans for a proposed UK Scale-up Fund worth more than £1 billion.

Announced on 27 July by the Department for Business, Innovation, Science and Trade alongside the Prime Minister's Office, HM Treasury, the Office for Investment and the British Business Bank, the proposal aims to bring together major pension providers to invest in Britain's next generation of high-growth companies. If established, the fund would connect long-term pension savings with fast-growing UK businesses, with the goal of supporting innovation while delivering returns for pension members.

What Is the £1B UK Scale-up Fund?

The proposed UK Scale-up Fund is designed to invest in British companies that have already demonstrated strong growth potential but require additional capital to expand. Rather than focusing on start-ups in their earliest stages, the fund would target businesses preparing to commercialise new technologies, enter international markets, and increase their workforce.

The British Business Bank is working alongside participating pension providers and intends to invest alongside the consortium if the fund proceeds. The Office for Investment is also supporting the development of the proposal. A market engagement process to appoint an investment manager is expected to begin shortly.

Why Pension Providers Are Involved

Pension funds invest over long time horizons, making them well placed to support businesses that may take years to deliver returns. According to the government, directing some pension investment towards successful UK growth companies could help increase the amount of domestic growth capital available while giving pension savers access to potential long-term investment returns.

Prime Minister Andy Burnham described the proposal as 'a vote of confidence in British business, British talent and British ambition.'

He said the proposed fund would help connect pension investment with entrepreneurs and technologies that could create future jobs, support economic growth and provide stronger returns for savers.

Keeping More Investment in British Businesses

The government says it wants more successful UK companies to grow with British investment. Business Secretary Jonathan Reynolds said Britain already leads in science, technology, and innovation and wants more businesses to 'start, scale and succeed here in the UK.'

He said the interest shown by major pension providers represented 'an important vote of confidence in UK innovation' and could support long-term economic growth, while helping pension savers benefit from successful British companies. Chancellor John Healey said Britain creates successful companies but does not always grow them with British capital.

He said the proposed £1 billion fund would mean 'more British money to back British scale-ups and better returns for pension savers.'

Pension Industry Leaders Back the Proposal

The organisations involved say their priority remains delivering strong long-term outcomes for pension members. Andy Bord, Chief Executive Officer of Railpen, said disciplined, patient investment could help ambitious companies grow while delivering attractive long-term returns for savers.

Nest Chief Executive Ian Cornelius said the UK has a strong record of developing innovative businesses. He said pension capital could help successful companies access the investment needed for their next stage of growth. Chris Rule, Chief Executive Officer of LPPI, said many expanding businesses continue to face challenges securing sufficient capital. He said collaboration between major pension funds could strengthen the UK's scale-up investment market.

Similar support was expressed by LGPS Central, Border to Coast, and the British Business Bank, with each organisation highlighting the potential benefits of combining long-term institutional investment with growing British businesses.

What It Means for Pension Savers

The proposal does not change how workplace or personal pensions operate today. Instead, participating pension providers are exploring whether part of their investment portfolios could be allocated to the proposed UK Scale-up Fund.

Any investment decisions would continue to be made under existing legal and fiduciary responsibilities, with pension providers required to act in the best financial interests of their members. If the fund is established, pension savers could gain greater exposure to successful UK growth companies through their pension investments. As with all investments, future returns would depend on the performance of the businesses backed by the fund.

What Happens Next

The UK Scale-up Fund remains a proposal and has not yet been launched. The consortium will now begin engaging with the market to appoint an investment manager and determine how the investment vehicle should operate.

The British Business Bank will continue working alongside participating pension providers as the plans develop. If the proposal moves forward, the fund would represent one of the UK's largest collaborative efforts to direct long-term pension capital into high-growth British science and technology companies. Its progress will depend on the outcome of the current development process and future investment decisions by the participating pension providers.