Official UK government announcements or pension fund structure analysis

Rachel Reeves Announces £1.7 Trillion Pension Megafunds in Biggest Reform to Unlock £80 Billion Investment

Nov 14, 2024, 07:26 AM

UK Chancellor of the Exchequer Rachel Reeves announced plans ahead of her Mansion House speech to create pension "megafunds" by consolidating existing pension schemes. The government intends to introduce legislation next year to pool £1.7 trillion ($1.7 trillion) of pension savings into eight large funds, aiming to unlock £80 billion of investment for infrastructure projects and businesses. Described as the "biggest set of reforms to the pensions market in decades", the initiative seeks to boost economic growth and increase returns for pensioners. The megafunds will be formed by merging the Local Government Pension Scheme assets and defined contribution pension schemes, following models used in the US, Canada, and Australia. While the reform is designed to drive growth and unlock investment, some critics have expressed concerns over the potential impact, calling the proposal a "grave mistake". The government has rejected more radical options, such as forcing pension funds to invest in British assets or creating a single Canadian-style fund.