Pensions minister Torsten Bell's recent speech touting venture capital returns has sparked fresh debate about private assets in retirement savings. Bell cited Ontario Teachers' Pension Plan's 30.2 per cent return from venture capital, but omitted that the C$280bn scheme lost 5.3 per cent on private equity and 3.1 per cent on real estate last year.

This selective data presentation exemplifies a broader industry problem. UK Private Capital reported 12 per cent annual returns since 2005, but these figures rely on unaudited internal rate of return calculations that can be misleading. Professional investors prefer cash-based metrics like 'distributions to paid-in capital,' which show UK venture funds returned only 0.21 times invested capital after fees since 2005.

With 10 per cent of defined contribution pension funds already allocated to private assets, investors face pressure to accept higher-risk investments. The government's push for patriotic investment masks its own capital constraints. While venture capital might stimulate innovation, UK track records remain poor. My advice: treat private equity promises skeptically and demand transparent, cash-based performance data before committing retirement savings to these opaque investments.