Rachel Reeves, chancellor of the exchequer, has announced a pensions review as part of the government’s aim to boost growth and productive investment into the UK economy.
The chancellor’s plans include looking at how broader investment strategies could potentially deliver higher pensions returns and how to unlock investment from defined contribution (DC) schemes, which could deliver £8 billion with further consolidation. How pension pots for savers in DC schemes could be boosted by more than £11,000, will also be explored.
Reeves will additionally work with Jim McMahon, minister of state at Ministry of Housing, Communities and Local Government, on the investment potential of the £360 billion Local Government Pensions Scheme, which manages the savings of those working to deliver local services, as well as how to tackle the £2 billion spent on fees.
This is the first phase in reviewing the pensions landscape and will be led by Emma Reynolds, joint Treasury and Department for Work and Pensions Minister. The next phase will start later this year, and consider further steps to improve pension outcomes and increase investment in UK markets, including assessing retirement adequacy.
The chancellor and the pensions minister will chair a roundtable with the pensions industry this week to start industry engagement for the review.
Reeves said: “This new government is getting on with the job of delivering our mandate to get the economy growing so we can make every part of our country better off. The review we are announcing is the latest in a big bang of reforms to unlock growth, boost investment and deliver savings for pensioners. There is no time to waste. That is why I am determined to fix the foundations of our economy so we can rebuild Britain and improve people’s lives.”
Reynolds added: “Over the next few months the review will focus on identifying any further actions to drive investment that could be taken forward in the Pension Schemes Bill before then exploring long-term challenges to ensure our pensions system is fit for the future. There is so much untapped potential in our pensions markets, with an industry worth around £2 trillion. The measures we have already set out in our Pension Schemes Bill will help drive higher investment and a better deal for our future pensioners.”
