24 July 2025

What the UK Pension Industry can learn from Australia’s superannuation commitment to life sciences

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In this blog, Dr Jonathan Tobin, Partner, Brandon Capitalexplores how the UK pension industry can unlock greater economic and societal value by following Australia's example.


The UK is at a strategic inflection point. Pension funds are increasingly being recognised for their potential to drive innovation, economic growth, and national resilience. And one of the clearest opportunities lies in aligning long-term capital with transformative sectors like life sciences.

Australia offers a compelling case study in how to do this. Brandon Capital is in the unique position of being the only Australian VC firm to have made a significant expansion into the UK market and has done so with the exclusive backing of Australian pension funds.

We are Australia’s largest life science VC firm with over A$1.33 billion (£650 million) in funds under management. Since founding in 2007, Brandon has played a pivotal role creating and building Australia’s biotech ecosystem, helping scale world-class academic research into globally competitive companies with life-changing products approved and capital returned to stakeholders. Our firm’s success has been made possible, in large part, by the long-term vision and support of Australia’s superannuation funds such as Host Plus, Hesta and Australian Super: pension funds managing hundreds of billions of dollars that have consistently backed private markets with conviction, including life sciences.

These institutions understand that to achieve differentiated returns, and to support sectors critical to the country’s future, capital must be both long-term and bold. This has been essential given Australia’s geographical isolation from the large northern hemisphere biotech markets.

The UK faces the opposite challenge – home to the highest concentration of top-tier biotechs outside Boston and San Francisco, despite a chronic scarcity of domestic long-term private sector capital supporting the sector.

Bringing Brandon to the UK

In 2021, I joined Brandon Capital to lead an expansion from Australia into the UK, establishing an office in King’s Cross. When evaluating global locations, London stood out for its unparalleled research, mature biotech ecosystem, and direct access to co-investors and talent across Europe. The cultural and institutional ties between the UK and Australia, along with similar investment philosophies, made it a natural extension of our transcontinental strategy: connecting biotech start-ups and investors across the UK, Australia, and the US.

Over the past four years, we’ve built a UK portfolio of early and later-stage biotech companies, committing almost £100 million to UK life science ventures. But there’s a paradox: while this capital contributes to innovation and growth in the UK, the financial benefits will mostly accrue to Australian pensioners.

The UK’s untapped capital

Despite managing over £2.5 trillion in assets, UK pension schemes allocate just 0.3% to venture capital. By contrast, Australian superannuation (super) funds on average allocate 1 to 2%, and some US institutional investors allocate up to 10%. This reluctance in the UK isn’t due to a lack of opportunity - far from it. 40% of European biotech deal flow is in the UK, yet local life science specialist funds have only raised 15% of the total European capital. This mismatch between supply and demand has driven overseas investors, including my own firm, into the UK market, which has been great for the sector, but possibly not for optimal economic gains for the UK.

Since 2022, UK biotech companies have raised nearly £6 billion in venture capital, but 80% of Series B and later-stage funding came from overseas investors. UK investors are instrumental in starting many of the biotechs, but they disproportionately shoulder the early-stage risk, where the failure rate and long timescale are not adequately compensated by superior returns.

Meanwhile, overseas funds capture the bulk of the upside of later-stage rounds where the science and management are significantly derisked. As a result, economic value generated by UK science is increasingly exported.

Why life sciences and pension capital are a natural fit

Biotech is unlike other venture sectors. It demands deep scientific expertise, long and technically risky development cycles, and regulatory and IP complexity. But it also offers exceptional financial and societal returns.

Every £1 invested in UK biopharma generates £2.80 in GDP impact. The sector creates 1.5x more jobs than average, builds high-value manufacturing, and creates IP. Importantly, life science venture capital has historically outperformed generalist VC funds over the past two decades, making it well-suited to pension capital seeking long-term, diversified, and high-impact exposure.

The opportunity is particularly relevant as UK pension schemes seek to diversify away from low-yield public markets and align their portfolios with long-term performance, and relevance and impact to their members.

What the UK can learn from Australia

Australia’s success hasn’t happened by chance. It reflects deliberate policy choices:

  • Mandatory pension saving: Employers are required to contribute 12% of salaries to superannuation, creating large, well-capitalised funds.
  • Appetite for long-term, illiquid assets: Leading superannuation funds invest consistently in venture capital, private equity, infrastructure, and innovation sectors, and back managers repeatedly across fund lifecycles.
  • Policy alignment: Co-investment vehicles like the $15 billion National Reconstruction Fund Corporation crowd in private capital while advancing national priorities.

The results speak for themselves: Australians retire with larger pension pots, rely less on the state, and benefit from a resilient economy built on future-facing industries.

A roadmap for the UK

The UK cannot replicate the Australian model wholesale, whose economy is structurally distinct and with a different legacy. The UK however has all the right ingredients: leading research institutions, an active venture ecosystem, and vast pools of mostly untapped institutional capital. The will and policy framework are in place to unlock that capital at scale, and when it happens the results will be transformational.

Some steps to get there might include:

  • Clarifying fiduciary duty so trustees can consider long-term, illiquid investments in strategic sectors;
  • Establishing co-investment mechanisms such as Long-term Investment for Technology and Science (LIFTS) to crowd in both domestic and overseas private capital, which could be partly modelled on Australia's NRFC. There are recent moves in this direction, particularly the British Growth Partnership.
  • Embedding sector expertise into fund governance, to improve decision-making in complex industries like biotech;
  • Expanding auto-enrolment and tailored incentives, beyond the LIFTS initiative, to promote pension allocations to sectors of long-term national value.
A moment to lead

The UK is at a turning point. Pension reform is already on the table - but the opportunity is bigger than just improving retirement adequacy. It’s about building national capability.

Integrated with the recently published industrial strategy for life sciences and with the right structures in place, UK pension capital could help create the next generation of biotech champions, companies that deliver a triple benefit of superior returns to savers, strengthening of the economy, and cures for diseases.

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