Fintech Industry Calls for Pension Fund Allocation to Boost UK Capital Access and Retain Growth at Home

The UK fintech industry is intensifying its push for pension fund investment as companies warn that a lack of domestic capital is forcing them to seek funding overseas, risking a shift in ownership and control of high-growth firms.

At recent gatherings in London, including the Innovate Finance Global Fintech summit and private roundtables hosted by City minister Lucy Rigby, industry leaders repeatedly raised concerns about pension funds’ minimal exposure to UK venture capital and growth-stage companies. One attendee noted that discussions on pension fund allocation consumed approximately 50 minutes of a 90-minute session with unicorn founders.

Industry figures warn that without greater domestic investment, promising UK fintechs will continue to rely on foreign capital, altering board composition and increasing the likelihood of overseas listings. Philip Belamant, CEO of Zilch, highlighted the stark decline in pension fund allocations to British equities, noting that while around 50% of such funds were invested in UK stocks 25 years ago, the figure has fallen to near 3%, with less than 0.1% directed toward venture capital.

Belamant warned that companies raising capital from overseas sources risk seeing strategic control shift abroad, making it unsurprising if they ultimately choose to list outside the UK. He described the issue as a significant challenge requiring urgent attention to preserve the UK’s position in the global fintech landscape.

The debate unfolds as the government advances the Pension Schemes Bill, which aims to modernise the sector by consolidating smaller pension pots into larger “megafunds.” While the bill includes controversial “reserve powers” allowing the government to compel pension schemes to invest in specific asset classes, some industry figures argue that mandates may not be the most effective route to unlocking capital for fintechs.

Recent surveys reinforce these concerns, showing that seven in 10 fintech bosses have adjusted their growth plans due to deteriorating access to capital in the UK. Industry leaders cite examples such as Wise’s decision to pursue a primary listing in New York rather than London as evidence of the trend, warning that more firms may follow unless domestic investment increases.