News

Rachel Reeves to unveil ‘big bang’ on British economy with biggest pension reform in decades which could unlock up to £80 billion worth of investment

Rachel Reeves will today unveil a major pensions shake-up designed to unlock up to £80 billion of investment in British infrastructure and business.

In her Mansion House speech tonight, the Chancellor will confirm she is pressing ahead with plans to merge pension schemes to create new ‘megafunds’ capable of investing in major infrastructure projects and emerging industries.

Ms Reeves will argue that the move could unlock a wave of private sector investment that will boost her anaemic growth forecasts and ultimately provide better returns for pensioners.

The Chancellor will use tonight’s speech in the City of London to try and set out a positive vision for growth, following last month’s high-tax Budget, which has rattled some employers.

Pledging to ‘go for growth’, she will say she has ‘never been more optimistic about our economic potential’.

In a thinly-veiled warning to Donald Trump, she will also make the case for free trade, arguing that protectionist tariffs of the sort planned by the president-elect would harm the global economy.

The source said evidence from countries like Canada and Australia suggested bigger schemes could deliver high returns by investing in projects like road and rail rather than tying up cash in government bonds.

New Treasury analysis to be published this week will show that big funds with assets of £25 to £50 billion could provide far more productive investment in a wider range of assets.

Ms Reeves will say: ‘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 Britain better off.’

In the biggest pension reform for decades, the existing 86 local authority pension schemes, which control assets worth almost £500 billion, will be required to consolidate their assets in a ‘handful of megafunds’.

Ministers will also legislate to create a minimum size for private sector defined benefit schemes, forcing the merger of some schemes, which between them manage almost £800 billion of assets.

The Treasury said the resulting megafunds would have to meet ‘rigorous standards to ensure they deliver for savers’.

Local authority schemes are also expected to have to invest at least 5 per cent of their assets in the local economy.

The plans, which were originally discussed by the last Conservative government, are now a key plank of Labour’s growth agenda, which took a knock last month when the Office for Budget Responsibility downgraded its forecasts for the later years of this decade following the Budget.

The proposals were welcomed by some in the pensions industry last night.

Zoe Alexander, director of policy and advocacy at the Pensions and Lifetime Savings Association, said the plans were a ‘positive step towards ensuring our system delivers the best value for money for savers’.

She added: ‘Larger pension schemes can help achieve better outcomes for savers through economies of scale, stronger governance, negotiating power and additional resources.’

But the Chancellor is facing a backlash from some local authority schemes.

In a response to a government consultation is September, the Local Government Pension Scheme Advisory Board warned that some members wanted to maintain local accountability and were concerned that they could be forced to break their duty to provide best value for pensioners if they were required to follow government investment rules.

The body acknowledged the existing structure was ‘not ideal’ but added: ‘Forced merger or consolidation should be avoided at all costs, as it is highly unlikely to lead to better outcomes.’

Related Posts

Al Sharpton reveals Trump cold called him after election win – here’s what he said

The Rev. Al Sharpton revealed Donald Trump unexpectedly cold called him after winning the presidency in 2016, claiming Trump told him: ‘You got me.’ The activist, 70, told the New York Times the out-of-the-blue phone call came after he went on MSNBC the day after Trump’s upset victory over Hillary Clinton. Explaining the shock to the nation, Sharpton stated that much of Trump’s appeal to the nation at the time stemmed from the perception of him as an outsider.

Hamas says female Israeli hostage is killed and another left fighting for life after IDF airstrike in Gaza

A female Israeli hostage was killed in an area of north Gaza when Israeli strikes pounded the region, a spokesperson for Hamas claimed today. Abu Obeida, the spokesperson for Hamas’ armed wing, said that they had learned of the unnamed hostage’s fate after re-establishing contact with ‘those assigned to protect the captives’ ‘weeks’ after the strikes in northern Gaza Strip. It was not clear from the statement when the strikes were to have taken place.

Victoria Beckham reveals the REAL reason for her extreme diet and admits she never cooks due to daughter Harper, 13, joking she can ‘burn water’

Victoria Beckham has revealed the real reason for her extreme diet, which according to husband David, has seen her eat the same thing for the last 25 years. The fashion designer, 50, said she first give up meat when she was only eight and now continues to abide by a strict set of rules for the sake of her skin, after struggling with acne at the height of her Spice Girls fame. Victoria said she now also avoids certain wheats and flours and keeps her complexion radiant with a £2,000 Dermalux LED device, which she uses for 30-minutes every morning.

Bill Maher tears into Yale psychiatrist for telling liberals to cut off family members who voted for Trump

Bill Maher has hit out at a Yale psychiatrist who said it was okay to disown family members who had voted for president-elect Donald Trump. Dr. Amanda Calhoun, a child psychiatry fellow at the Ivy league school, had made the comments earlier this month on MSNBC after Trump’s election. Speaking with Joy Reid, she said: ‘There is a societal norm that if somebody is your family that they are entitled to your time and I think the answer is absolutely not.’

Kamala 2028? Insiders reveal Harris may still have her sights set on the White House

Vice President Kamala Harris is now in Hawaii enjoying a long vacation after her dramatic defeat by President-elect Donald Trump. But political insiders who know her say she will already be thinking about a potential return to the campaign trail. ‘Of course she’s going to try and run again,’ one well-connected Democratic strategist told DailyMail.com, citing Harris’ ambition as a factor.

Fleet of drones is spotted over major US airbase in Britain where they are building facilities to house nuclear weapons

The largest American airbase on British soil was buzzed by drones this week, the US Air Force has confirmed, amid unconfirmed reports that fighter planes were dispatched to intercept the encroaching aircraft. The incident occurred on Wednesday above RAF Lakenheath in Suffolk, which has been earmarked as a storage facility for US nuclear warheads three times more powerful than the Hiroshima bomb. While US Air Forces in Europe (USAFE) played down the incursion, it will do little to dampen the prevailing mood of unease following warnings from Vladimir Putin that Ukraine’s use of British and American long-range weaponry could see military facilities in those countries targeted.

Leave a Reply

Your email address will not be published. Required fields are marked *