Chancellor to merge council pension pots into 'megafunds' to unlock investment cash

13 November 2024, 23:52 | Updated: 14 November 2024, 11:02

The government has revealed plans to merge the UK's local government pension scheme - into a handful of so called "pension megafunds".

Rachel Reeves will use her first Mansion House speech as Chancellor today to outline a shake-up of the sector.

The proposed reforms will be introduced through a new Pension Schemes Bill next year - with assets consolidated into a handful of funds run by professional managers.

The government says it will help unlock billions of pounds of investment in businesses and infrastructure in England and Wales.

A financial expert has said caution is needed in using other people's money to drive economic growth.

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Rachel Reeves said: “Last month’s Budget fixed the foundations to restore economic stability and put our public services on a firmer footing. Now we’re going for growth.

“That starts with the biggest set of reforms to the pensions market in decades to unlock tens of billions of pounds of investment in business and infrastructure, boost people’s savings in retirement and drive economic growth so we can make every part of Britian better off.”

Deputy Prime Minister Angela Rayner added: “We’ve all seen the fantastic work carried out day in, day out, by our frontline workers and it’s about time their pension started working just as hard by driving investment in their communities. 

“This is about harnessing the untapped potential of the pensions belonging to millions of people, and using it as a force for good in boosting our economy.”