At a recent Pensions UK conference, a speech by pensions minister Torsten Bell referenced the Ontario Teacher Pension Plan’s investments in venture capital leading to 30.2 per cent returns in 2025, raising some eyebrows.
He went on to say that “It’s hard to find a UK (venture capital) raise the Ontario Teachers Pension plan (OTPP) is not backing”. This includes the 2025 investments into decision intelligence platform Quantexa and AI energy company Kraken.
However, when it comes to overall private markets returns, the OTPP’s results are less promising.
In 2025, Ontario Teachers’ underperformed its benchmark return of 11.7 per cent by 5 per cent, or $12 billion in negative value add. According to OTPP, underperformance was driven by several factors across private equity, infrastructure and real estate, with “asset and industry-specific challenges” in those portfolios.
In addition, another of OTPP’s private equity investments was into failed cryptocurrency platform FTX. The total write-off from this investment was $95m, relatively minor compared to the $203 billion in assets the firm has. However, at one point the pension fund looked like it was facing a class action lawsuit over the investment (this was later dropped), showing the reputational risks that can be attached to retirement savers’ lost money.
In addition, OTPP’s VC investments were only a small part of its global venture growth portfolio, and its European book also included capital committed to Spanish dental provider Donte Group, real estate across Sweden and Denmark, and an airport portfolio that includes stakes in Copenhagen and Brussels.
Bell had claimed OTPP’s impressive VC returns as part of a wider argument that UK pension funds should be investing more in its nation’s venture capital sector.
Referring to a recent report by the British Business Bank (BBB), he says: “The top quartile of UK venture funds shown here outperformed the top quartile of every other private market asset class.”
However, closer inspection also reveals that this attractive figure may be somewhat misleading. BBB figures show that that this upper quartile beats other private asset classes, however private equity has a higher median return, a pooled total value to paid-in capital (TVPI) multiple of 1.74 to VC’s 1.48. The lowest quartile of venture capital also underperforms compared to the lowest quartile of private equity.
The same BBB report also did a long term assessment of UK VC. It concluded that UK VC funds with 2002-2020 vintages generated a TVPI multiple of 1.84, compared to 1.85 for funds across the rest of Europe and 1.95 for US funds.
In essence, over time the UK’s VC sector is slightly below the rest of the continent and significantly below the US when it comes to returns.
Perhaps unsurprisingly, none of this further context was mentioned during Bell’s speech, at a time when the government is strongly encouraging DC investing into UK private markets through the Mansion House Compact, and as it weighs whether to reintroduce the mandation clause to the Pension Schemes Bill as it heads back to the Commons.
An often identified critique when it comes to venture capital, and private markets more widely, is that higher fees means less overall returns to members, especially when compared to sectors like passive equities, which has delivered strong growth in recent years, but with low fees.
On this point, Bell says: “I appreciate in practice, fees do pose challenges, but I would just gently note that we as an industry can’t ask others to focus on net returns rather than costs if we’re sometimes repeating exactly the same mistake ourselves.”
Private markets continued to deliver insipid performance in the third quarter of 2025, with returns dwarfed by those seen in buoyant global equity markets, according to the latest data from PitchBook.
According to preliminary data published in its Global Fund Performance report, private equity showed an internal rate of return of 1.2 per cent in Q3 of 2025, while the overall return for private debt stood at 1.9 per cent.
The data provider, now owned by Morningstar, says that across all private market sectors near-term IRRs lag their long-term averages, with rising interest rates weighing on asset valuations and leading to poor returns.
