Private equity has not always met the return expectations of investors, particularly during the financial crisis.

Kishore Kansal, head of Tullett Prebon Private Equity Risk Solutions, said: "Where private equity doesn't work is where there is illiquidity and poor performance. Pension funds are happy to park money for a long time where they get two-times net returns. Many large buyout firms have struggled to get past their preferred return, let alone into carried interest. Those have not been good investments for pension funds."