How can Irish pension reform unlock venture capital for start-ups? The very question was touched on by Finance Minister Pascal Donohoe TD at the Scale Ireland autumn gathering.
Ireland may be about to finally grasp the nettle on ensuring pension funds invest in the domestic economy.
Ireland’s Finance Minister Paschal Donohoe, TD, told yesterday’s Scale Ireland autumn gathering in Dublin yesterday (4 September) that he is considering a number of potential measures, including pension fund reform, simplification of tax incentives, and targeted funding mechanisms in Budget 2026.
“We’re at the point where we’re about to deliver that pensions moment, and we should think therefore what that means for funding as well”
Speaking at the gathering, Minister Donohoe said the looming onset of auto-enrolment presents an opportunity for Ireland to put in place measures for the future.
Auto-enrolment represents a generational turning point
The Minister also acknowledged the complexity of current support schemes like EIIS and R&D tax credits and pointed to the need to balance targeted support with accessibility.
He said that European Union compliance requirements contribute to this complexity, but said consultations are underway to address regulatory burdens while maintaining single market benefits.
On the subject of pension reform, Donohoe highlighted the critical juncture in Ireland’s pension sector development, noting the correlation between well-developed national pension schemes and well-funded start-up ecosystems observed in other countries.
Scale Ireland chair Brian Caulfield pointed to the situation in the US where pension funds invest about 2% of their assets in venture capital.
“In Europe, European investment funds invest just around zero. Even a small increase in the portion of pension fund savings going into high growth indigenous companies would have a significant impact on the availability of capital. And it would not cost the Exchequer anything,” Caulfield recommended.
Other European countries, he said, including the France, the UK and Denmark are already spearheading changes in this area.
Minister Donohoe said that with the onset of the auto-enrolment scheme “we are at a really critical point in the pension sector here in Ireland because we’re looking now to take the first step towards delivering real scale.
“It’s going to be one of the biggest things the Government is going to do and it will make a massive difference to what our country looks like in a few generations.”
He said most of the focus right now is getting the auto-enrolment scheme up and running but acknowledged that there is a correlation between well-developed national pension schemes and well-funded ecosystems.
“We’re at the point where we’re about to deliver that pensions moment, and we should think therefore what that means for funding as well.”
Moving the needle
During a panel discussion with investors Debbie Rennick, general partner with ACT Venture Capital, made the point that if Ireland wants to grow larger indigenous companies we will need larger funding rounds to sustain longer development cycles.
“If you want to move the needle, you must get capital from the pension funds”
“Companies need to raise more to be globally competitive. A trend that’s going on in Ireland is that we do not have the capital to actually support the companies all the way through their life cycle of the investment. It is never a straight line to success,” she said.
“If we want to create our own multinationals, we will need to stop having early exits, and we will need to stop our companies downsizing or going to the US and other countries. To do that, we need to have an adequately funded [venture capital] ecosystem here. And critical to that is making sure that the pension funds are a sufficient driver to it.
“We are drastically underfunded in terms of the fact there is no access to capital from pension funds in Ireland today, it is a massive problem. And obviously all of the supports that are there are really important. But if you want to move the needle, you must get capital from the pension funds,” Reynolds recommended.
She subsequently made the point that the Irish venture capital industry was originally formed more than 40 years ago with the purpose of getting pension funds to invest in backing Irish businesses.
“It would be great if we could be leaders. And I think we have the potential with a great ecosystem here. And if we can fix that, there will be an awful lot more money in the in the ecosystem.”
Image at top: Pascal Donohoe addressing the 2025 Scale Ireland autumn gathering
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