Chancellor Rachel Reeves Unveils Major Pension Reforms to Drive Economic Growth
Chancellor Rachel Reeves aims to supercharge pension growth. Her plan could boost pension pots by £11,000 and unlock billions in investment. This will come from a review of how retirement savings are managed.
By 2030, pension schemes are set to handle about £800 billion. The review will explore ways to encourage investments in things like infrastructure. The Treasury says this will support economic growth and give better returns to savers.
A Pension Schemes Bill was introduced in the King’s Speech. This bill will help savers by making small pension pots easier to manage and ensuring good value for money.
Rachel Reeves said, “Despite a tough start, our Government is working hard to grow the economy. We want to make every part of our country better off. This review is part of our plan to boost growth, investment, and savings for pensioners. We need to fix our economy’s foundations to rebuild Britain and improve lives.”
The review will be led by Emma Reynolds, the new pensions minister. This is the first time this role will work with both the Treasury and the Department for Work and Pensions.
Reeves and Reynolds will meet with the pensions industry to discuss the review. The Chancellor will also chair the first “Growth Mission Board” to secure the highest sustained growth in the G7.
The Government is also looking at further consolidating the Local Government Pension Scheme (LGPS). Currently, it is split across 87 funds, costing £2 billion a year in fees.
Emma Reynolds said, “Over the next few months, we will focus on actions to boost investment. We will look at long-term challenges to make sure our pensions system is ready for the future. Our pensions market is worth around £2 trillion. We have set out measures to boost investment and improve deals for future pensioners.”
The pensions sector has welcomed the review. Andrea Rossi from M&G said it was “long overdue.” He added that consolidation and advice could align savers’ interests with the UK’s growth goals. Barclays’ CEO, CS Venkatakrishnan, said pension reforms are key to unlocking investment in growth equity and boosting UK capital markets.
The previous government also saw pensions as a way to invest in UK businesses and infrastructure. Then-Chancellor Jeremy Hunt announced reforms in March to improve value for money in pensions.
Writing in the Mail on Sunday, Reeves criticized the Conservatives for failing to act on pensions for 14 years. She said the current system is not delivering enough retirement savings or supporting British businesses. Reeves declared, “Where they have failed, I will act.”
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