Is Reeves on a mission to take control of pensions?

CHANCELLOR Rachel Reeves is looking to shake up the way we save and invest in Britain, and she wants to do it with your pensions and ISA money.

- By Harvey Jones

With economic growth faltering and investment drying up, she views our retirement savings as valuable tools to help revive UK plc.

There are three ways Reeves may do this. First, she’s looking at slashing the Cash ISA allowance from its current £20,000 to as little as £4,000.

The aim is to steer more of our savings into Stocks and Shares ISAs, which she hopes will funnel cash directly into UK-listed companies.

She could even force ISA investors to place, say, 25% or even 50% of their money into British equities, rather than letting it flow into higher-growth markets like the US.

Secondly, under her Mansion House reforms, Reeves is nudging pension funds to direct up to £50billion into UK infrastructure, unlisted firms and “productive assets”, again, rather than sending our savings abroad.

Reeves is also being urged to make the valuable tax relief that savers receive on pension contributions conditional on investing in the UK.

We don’t know her response but it seems to fit in with her thinking.

LOGIC

At first glance, the logic may seem sound. ISA and pension tax breaks cost the Treasury tens of billions. Reeves clearly believes that if taxpayers are footing the bill, then their money should be helping boost the UK economy, not prop up US tech stocks or European retailers.