Chancellor Rachel Reeves is considering consolidating local government pension schemes – thought to be worth a combined £360bn – in order to invest in the economy.
The potential move is inspired by Canada’s approach of using pension funds for infrastructure projects to boost growth. Reeves is set travel to North America this week, where she’s expected to meet with a group of Canadian retirement funds.
Local government pensions in England and Wales are currently split into 86 individual funds, serving a total of around six million members.
Speaking about the possible plans, Reeves said: “The size of Canadian pension schemes means they can invest far more in productive assets like vital infrastructure than ours do.
“I want British schemes to learn lessons from the Canadian model and fire up the UK economy, which would deliver better returns for savers and unlock billions of pounds of investment.
“We’re already beginning to see schemes announce plans to invest. That’s a vote of confidence in our work to fix the foundations of the economy, rebuild Britain and make every part of our country better off.”
The Labour Party previously announced plans to review the pensions sector in its 2024 election manifesto, while driving economic growth across the country featured prominently in the recent King’s Speech.
Reeves is expected to give further details of her plans for the country’s pension arrangements in her first Mansion House address after the summer parliamentary recess.
Source: Sky News. August 2024. https://news.sky.com/story/chancellor-eyes-canada-style-pension-reform-to-drive-uk-investment-13192543.