The U.K. government is calling on the nation’s pension funds to participate in an “investment big bang” by allocating more capital to domestic and long-term illiquid investments. It’s a proposal that’s short on detail and fraught with difficulties, and one that pension fund trustees should treat with an abundance of caution.

Prime Minister Boris Johnson and Chancellor of the Exchequer Rishi Sunak recently wrote an open letter to the overseers of Britain’s 2.6 trillion pound ($3.6 trillion) pension industry. They bemoaned foreign pension funds reaping the benefits of what they called “the fruits of U.K. ingenuity and enterprise,” and called on U.K. investors to “back British success stories and secure higher returns and better retirements.”

British institutional funds have definitely been putting more of their money offshore. The Pensions Policy Institute estimates that about a third of the equity holdings of U.K. pension funds are invested domestically, with the remaining 70% allocated to overseas stocks. Foreigners own more than half of U.K. listed stocks. Local pension funds own just 2.4%.

“Buying British,” though, would have been a losing strategy in recent years. The FTSE All-Share index has delivered a total return of just 30% in the past five years, with the MSCI World Index posting gains that are three times better.

In their letter, the government ministers argue that pension plans are missing out on potential returns because only a fifth of U.K. assets are in the form of listed securities. Public market investments, meantime, comprise more than 80% of pension plans’ allocations. Johnson and Sunak urge “a change in mindset and behavior among institutional investors.”

Investing in private equity is tricky, though. Clients of fund manager Neil Woodford found out to their cost when his firm blew up two years ago after loading up on illiquid stakes in closely held companies. Backing startups demands specialist expertise, as well as patience and, arguably, more than a modicum of luck.

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