Billions in Irish pension assets sit largely overseas. Experts say even a small domestic allocation could boost jobs, innovation and resilience. The UK and French governments have introduced measures to encourage pension funds to invest in enterprise. This is an attempt to direct much-needed capital into the enterprise sector – but what’s in it for pension schemes? Is this something that could or should be copied in the State?
The UK and France are attempting to align long-term savings with national priorities, says Rav Vithaldas, EY Ireland partner and pensions assurance leader.
“UK funds pledged up to £50 billion by 2030 for infrastructure, private equity, early-stage firms, and green energy, half in domestic assets,” he says.
“France’s Tibi labelled funds helped inject roughly €30 billion into the French tech ecosystem. Broader aims include diversification, better returns, supporting innovation, green transition and reducing reliance on foreign capital from a strategic and sovereignty perspective.”
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It will be interesting to see how these plans yield tangible economic benefits, says Niall Savage, head of private enterprise, KPMG. “This initiative could stimulate innovation and growth in the UK economy, with fund managers like Aviva, Aon, Mercer, Legal & General, and others leading the way in investing in private market assets.”
The Republic lags significantly behind in deploying its substantial pension assets into domestic enterprise, says Gavin Sheehan, partner, deal advisory, at KPMG.
“The Irish pension-fund sector held assets of €141 billion, according to the Central Bank of Ireland Pension Funds Statistics Q2 2025, with an immaterial allocation to private enterprise. Directing even a small proportion of these private funds towards venture capital investment would meaningfully support the growth of scaling Irish companies.”
Mobilising even a small portion of the total pension pot would provide a sustainable, non-bank funding source for domestic businesses and scale-ups, says Savage.
“This investment would support research and development, as well as capital expenditure, both of which are essential for enhancing productivity, generating jobs, and ensuring long-term economic resilience.”
Irish pension funds face multiple barriers to investing in enterprise, says Vithaldas. “Regulatory prudence under IORP II and Irish Central Bank guidelines emphasises liquidity and risk control, making high-risk, illiquid assets like SMEs and private equity less attractive.”
The pension system’s small size and fragmentation limits capacity for large, diversified enterprise allocations, Vithaldas says. “Trustees are risk-averse, focusing on predictable returns to match liabilities. Long lock-ins, governance and expertise gaps, cultural preference for foreign markets, and lack of policy incentives or tax support further discourage domestic SME and venture investments.”
If the Republic adopted a similar model, safeguards should include clear allocation targets, co-investment platforms, and tax incentives to direct capital into SMEs and green assets, says Vithaldas. “Risk-sharing mechanisms, liquidity solutions and fund-of-funds structures would reduce exposure. Capacity building for trustees, ESG alignment, and consolidation would enhance governance, scale and diversification, ensuring pension investments support both financial returns and national development goals.”
For the State, the stakes go beyond pensions and enterprise funding. Directing even a modest share of long-term savings towards domestic business could strengthen economic sovereignty, reduce reliance on foreign capital and underpin innovation-led growth. But without clear incentives and stronger governance, the opportunity may remain untapped, leaving Irish firms reliant on more traditional funding sources.
