Chancellor Rachel Reeves has launched a "landmark review" into pensions to boost investment, increase pot sizes and tackle waste in the pensions system.
The review will be in two stages. The first will focus on productive investment including scheme consolidation and encouraging "broader investment strategies". It will be led by pensions minister Emma Reynolds.
The second phase, starting later this year, will look at how to improve pension outcomes and increase investment in UK markets.
During the election campaign, Labour had promised a full review of the UK pension landscape.
The chancellor and pensions minister will chair a roundtable with the pensions industry today (July 22) to start intensive industry engagement for the review.
Reeves said: “Despite a very challenging inheritance, this new government is getting on with the job of delivering our mandate to get the economy growing so we can make every part of our country better off.
“The review we are announcing is the latest in a big bang of reforms to unlock growth, boost investment and deliver savings for pensioners. There is no time to waste. That is why I am determined to fix the foundations of our economy so we can rebuild Britain and improve people’s lives.”
According to the government, defined contribution schemes will manage around £800bn in assets by the end of the decade and the review will look how to increase investment in “productive assets”.
It said even a 1 percentage point shift of assets into productive investments “could mean £8bn of new productive investment to grow the economy and build vital infrastructure by the end of the decade”.
In turn these assets could help people save more as productive assets are likely to have higher returns.
Reynolds added: “As the first ever joint Treasury and DWP minister I am uniquely placed to tackle the twin challenges of productive investment and retirement outcomes.
“Over the next few months the review will focus on identifying any further actions to drive investment that could be taken forward in the pension schemes bill before then exploring long-term challenges to ensure our pensions system is fit for the future.
“There is so much untapped potential in our pensions markets, with an industry worth around £2tn. The measures we have already set out in our pension schemes bill will help drive higher investment and a better deal for our future pensioners.”
Last week as part of the King’s Speech, the government unveiled the pension schemes bill.
Measures in the bill include poor performing default funds being cast under the spotlight as part of the value-for-money framework, the consolidation of small pension pots as well as occupational pension schemes being required to offer retirement income solutions to members.
amy.austin@ft.com
