The UK should establish a £100bn pension ‘superfund’ to support the nation’s tech sector and help build a £1trn tech economy, a new report from The Purposeful Company has urged.

In its paper, ‘The Growth Trilogy – The Trillion Pound Question’, the think tank argued that pension funds hold the key to unlocking the country’s tech potential but warned that reform is essential to make this possible.

The report found that UK pension funds have the lowest equity exposure among comparable economies, holding just 4 per cent of assets in domestic shares. In comparison, allocations in Canada and the Netherlands exceed 20 per cent and the US invests more than 23 per cent.

In addition, retail participation is also low as just 8 per cent of UK household wealth is held in equities compared with 33 per cent in the US. This leaves over £740bn of potential capital untapped for productive investment, according to the report.

The report highlights the impact of this underinvestment, noting that high-growth scaleups, such as DeepMind and Arm, often sell to foreign buyers rather than listing in the UK.

Phoenix Court co-founder and executive chair, Saul Klein, said: “The UK now has more than 800 scale-ups generating over £25 million in revenues, more than France, Germany and the Netherlands combined, making us second only to Silicon Valley.

“But right now, when scaling tech companies succeed, 80 per cent of the upside flows overseas to fund pensions abroad. UK pension funds and institutions must get behind the innovative UK businesses that are creating jobs, driving productivity and powering the country’s future. This is not charity, this is a great opportunity to build growth and returns over the long term.”

To address this problem, the think tank called for a "fundamental overhaul" in how the UK mobilises its pension savings to drive national economic growth.

The report recommends establishing £25bn-plus “pension superfunds” to support venture capital, growth equity, and IPOs, alongside reforms to ISAs and pensions to make it easier and more appealing for retail investors to back UK companies.

It also called for cutting stamp duty on shares and boosting equity research coverage to restore retail confidence in UK markets, while laying the groundwork for a funded universal state pension to provide both security for retirees and a lasting pool of national investment capital.

The report suggested that with these reforms, UK pension savings could more effectively shape the country’s tech sector, retaining capital, talent and returns at home while driving long-term economic growth.

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