Reeves set to merge council pensions into ‘megafunds'

Pension “megafunds” are set to be created to help unlock billions of pounds of investment in UK businesses and infrastructure.

- VICKY SHAW, JANE DALTON

Rachel Reeves will use her first Mansion House speech today as chancellor to outline what is billed as the biggest pensions shake-up in decades.

Consolidating assets into a handful of funds run by professional fund managers will allow them to invest more in infrastructure, supporting economic growth and local investment on behalf of the UK’s 6.7 million public servants, the government says.

It predicts the move could deliver around £80bn of investment in new businesses and critical infrastructure.

The reforms, which will be introduced through a new Pension Schemes Bill next year, involve consolidating defined contribution (DC) schemes, as well as pooling assets from 86 local-government pension scheme authorities.

There are already around 60 different multi-employer schemes, such as the Independent Schools’ Pension Scheme, each investing savers’ money into one or more funds.

The government will consult on setting a minimum size requirement for these funds.