Chancellor's idea will not make most pensions any safer

‘Were Reeves brave, she'd close defined benefit pension schemes’

- Ross Clark

ACHEL Reeves wants to amalgamate 86 local government R pension schemes into a handful of "megafunds" worth £360billion, which will whfiles are a be encouraged to in seek retr money in the shareoubles he f companies. The Labour Chancellor outlined her pensions shake-up in last night's Mansion House speech.

The reluctance of pension funds to invest in the UK is certainly bizarre. In 1997, they collectively owned 22.1% of the UK stock market but, by 2022, it was a paltry 1.6%.

This has much to do with Gordon Brown, who obliged pension funds to invest more in Government bonds - because he wanted them to lend him the money for his spending splurge, and also because, he argued, bonds were a safer match for pension funds' liabilities than were shares.

That the UK stock market has underperformed in the past two decades is partly down to the pension industry shunning it. It left a swathe of undervalued companies to be snapped up by the preying sharks of US private equity at bargain prices.

Moreover, as we found out after Liz Truss's mini-budget, bond investments aren't safe. A slide in the bond market nearly led to the collapse of pension funds, averted only when the Bank of England stepped in.

I would love to see UK pension funds both state and private backing UK companies.