REEVES UNVEILS £25BN PLAN TO CREATE PENSION ‘MEGAFUNDS’ – Wider drive to channel more investment into the UK economy
Some UK pension schemes will be told to merge into so-called “megafunds” worth at least £25 billion by 2030. It’s part of the government’s plan to drive more investment into the British economy.
The reforms target smaller pension schemes, pushing them to consolidate, similar to systems in Australia and Canada, where larger funds can invest more effectively.
Finance Minister Rachel Reeves says the changes will deliver better returns for workers and unlock billions for clean energy and high-growth industries.
It’s the latest step in the government’s push to boost domestic investment. Seventeen investment firms have already pledged £50 billion for UK businesses and infrastructure.
The latest changes, to be laid out in a forthcoming pensions scheme bill, will apply to multi-employer defined contribution schemes and local government pension schemes, the government added.
Providers and consultants have urged the government to focus on value for money metrics, rather than asset size, when driving consolidation in the Defined-Contribution (DC) market.
These responses suggest that the industry is not fully supportive of the Chancellor’s plans to impose so-called ‘mega funds’ in the DC market, to it says, encourage greater investment into productive assets. There are significant concerns that simply imposing a minimum asset size on workplace pension providers could stifle innovation in the market, and on its own, will do little to improve member outcomes.
