The UK’s pension system could be in line for a drastic overhaul under plans being drawn up by the Chancellor.
Rachel Reeves is floating consolidating local Government pension schemes in order to pool their £30billion in resources.
This is a similar model used in Canada with Reeves meeting representatives of the Maple Eight group of Canadian retirement funds in Toronto later today.
Retirement Funds, such as the Ontario Teachers’ Pension Plan and the Canada Pension Plan, are huge infrastructure investors across the pond.
The Chancellor is hoping the UK Government will learn from these schemes to fund future infrastructure ambitions.
Under England and Wales’ local Government schemes, the framework is split into 86 separate funds, across six million members.
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Reeves has pledged to reform the country’s pension infrastructure
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Reeves explained: “The size of Canadian pension schemes means they can invest far more in productive assets like vital infrastructure than ours do.
“I want British schemes to learn lessons from the Canadian model and fire up the UK economy, which would deliver better returns for savers and unlock billions of pounds of investment.
“We’re already beginning to see schemes announce plans to invest.
“That’s a vote of confidence in our work to fix the foundations of the economy, rebuild Britain and make every part of our country better off.”
Previously, the Labour Chancellor has already her intention to review the sector with the goal of seeking more investment.
The money will be generated with the hopes of bolstering returns on Britons’ pension pots.
In Reeves first Mansion House address, she will will reportedly outline how this work under the current regulatory rules with the intention of consolidating funds.
Among the investment firms praising the review include Legal & General, Aviva and Phoenix.
Last week Phoenix and Schroders launched their Future Growth Capital co-investment fund, designed to invest up to £20billion in the UK over the 10 years.
In its first month since returning to Government, Prime Minister Keir Starmer’s Labour Party has already made drastic changes affecting pensioners.
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The Government is exploring a pension scheme model used in Canada
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Notably, Reeves shared plans to means-test the Winter Fuel Payment in a move that is estimated to detrimentally impact 800,000 pensioners.
Under this benefit, all Britons of state pension age are entitled to up to £300 in energy bill support.
However, this will now be reserved for those on means-tested benefits from the Department for Work and Pensions (DWP), such as Pension Credit and Universal Credit.
Despite this, the Government has pledged to keep the triple lock on state pension payments going forward.