Later Thursday, British Treasury director Rachel Reeves is expected to reveal plans to combine dozens of pension funds to increase the poor economic growth in the United Kingdom and free up tens of billions of pounds for investment.
Reeves will claim that the establishment of so-called “megafunds” will constitute the “biggest pension reform in decades” in remarks made public by the Treasury before her address to finance leaders in central London.
Reeves will suggest that the measures might help unleash 80 billion pounds ($100 billion) for investment in her first “Mansion House speech,” which is a yearly tradition for British chancellors of the exchequer.
To boost retirement savings, pension funds invest in a range of assets, including stocks, bonds, real estate, and infrastructure to boost retirement benefits for their members.
The proposed amalgamation of 86 local government pension funds in England and Wales bears similarities to programs implemented in Australia and Canada, where pension funds are generally perceived to have used their larger scale to increase growth and invest in assets.
Approximately 500 billion pounds in assets are expected to be managed by the new Local Government Pension Scheme in England and Wales by 2030.
Next year, a new law will be introduced in parliament by the new Labour administration, bringing the improvements.
Early signs point to widespread support for it both within the pensions sector and across the political spectrum since the former Conservative administration had signaled it would follow suit.
Laptops 1000According to Zoe Alexander, director of policy and advocacy at the Pensions and Lifetime Savings Association, a group that aims to unite the sector and advance best practices, “larger pension schemes can help achieve better outcomes for savers through economies of scale, stronger governance, negotiating power, and additional resources.”
After Reeves’ tax-raising budget last month, business leaders cautiously welcomed the reform proposal but “The government needs to work hard to regain the confidence in the U.K. as a place where businesses and communities can succeed,” stated Louise Hellem, chief economist for the Confederation of British Industry, in light of the budget’s burdensome expenses on businesses and its restriction of their headroom for investment.
“A thriving U.K. economy will be desirable for pension plans to operate in,” she continued.
Since 2008–2009, the British economy has performed worse than it did in prior years due to the global financial crisis.
Boosting growth is the government’s primary objective.
Forecasts for Friday’s data indicate that the economy gained very little in the second quarter of this year, he stated that the government must put in a lot of effort to gain their support.
