Britain’s new Labour government is reviewing the pensions system to look at ways to shift more investment into productive assets with the aim of boosting economic growth and improving retirement incomes, it said on Saturday.
Prime Minister Keir Starmer has made tackling the country’s anaemic growth one of his government’s core aims since winning a July 4 election.
As part of its first package of proposed laws, the government announced last week a new Pensions Schemes Bill which would seek to encourage consolidation of smaller pension schemes and broaden investment strategies.
“The review we are announcing is the latest in a ‘big bang’ of reforms to unlock growth, boost investment and deliver savings for pensioners,” finance minister Rachel Reeves said in a statement.
“I am determined to fix the foundations of our economy.”
Defined contribution schemes are set to be managing around £800 billion ($1 trillion) in assets by the end of the decade and increasing their investment into productive assets would help grow the economy and build infrastructure, the Treasury said.
The government said its review would look at how to increase the investment potential of the £360 billion Local Government Pensions Scheme (LGPS), which manages the savings of those working for local authorities across Britain.
The LGPS is split across nearly 90 funds and consolidation could help reduce fragmentation and waste, the government said, adding that it would consider legislating to mandate pooling the money if insufficient progress was made by March 2025.
Reeves and pensions minister Emma Reynolds will chair a roundtable with the pensions industry on Monday.
The first stage of the pensions system review will report within months and will take account of the need to prioritise gilt market stability, liquidity and diversity, the statement added. A second phase will consider the wider pensions landscape.
Barclays said it welcomed the government’s “timely review” of the pensions sector. “Pensions reforms are critical to unlocking institutional investment in growth equity,” the bank’s chief executive C. S. Venkatakrishnan said.