The Financial Times (p10) reports that the appeal follows Tony Blair's call to pension funds to allocate more of their assets to venture capital projects.
In a submission to the treasury, the NAPF also urged an investigation into the reasons for the paucity of viable venture capital projects in the UK.
The association, which represents the leading pension funds, also warned the government against ending the capital gains tax exemption, which was mooted in the run-up to the last budget.
'I can't make pension funds invest more, but I urge them to look at this issue, to examine whether they and other institutional investors are being too cautious when it comes to venture capital,' he said.
In the UK pension funds invest less than 1% of their assets in venture capital, while US pension funds invest over 5%.
But the association said the government should revise the minimum funding requirement - introduced two years ago under the Pensions Act of 1995. This requires pension funds to invest in a list of risk-averse asset classes, which excludes venture capital.