This is a departure of the classic "70-30 Model" where a pension fund would invest 30% of its assets in publicly-listed stock.
[2] The trend towards increased allocation to private equity including venture capital accelerated after 2009–2010.
At the start of the Great Recession in the late 2000s, European and Canadian financial economics experts notably from the World Pensions Council estimated that: "the crisis would usher an era of durably low interest rates, pushing more pension and insurance investors to pursue a ‘quest for yields,’ increasing mechanically their allocation to non-traditional asset classes such as private equity"[3]The traditional drivers of pension investment in private equity include statistical diversification stemming from partial decorrelation to listed securities (‘listed equity’ i.e. stocks and also bonds), expectation of superior risk-adjusted returns over long periods (typically 8 to 10 years), access to early-stage industries and fiscal incentives for investments in SMEs and/or innovative technologies.
[5] Large pension funds typically have long-dated liabilities (longer than those of other institutional investors such as banks or insurance companies).
They have a generally lower likelihood of facing liquidity shocks in the medium term and thus can afford the long holding periods required by private equity investment.