Reeves to loosen rules on how pension funds invest

Sir Keir Starmer and Rachel Reeves are turning to Britain’s pension funds in a desperate bid to unlock cash for investment and get the economy growing.

- ARCHIE MITCHELL

The prime minister and chancellor are loosening the rules around how pension funds invest, allowing them to plough surplus funds into the wider economy. The changes, which the pair will unveil at a roundtable of business leaders in the City, come after a barrage of criticism over the government’s handling of the economy since coming to power six months ago.

Since the general election, the economy has flatlined, while the chancellor’s October Budget lumped businesses with higher taxes and wage bills, leading to major firms laying off thousands of staff. On Friday, in a bid to win back credibility with business chiefs, Ms Reeves will paint the pension fund reforms as part of an “urgent mission” to “tear down the biggest barriers to growth, taking on regulators, planning processes”.

Officials believe that around three in four defined contribution pension schemes are in surplus, with around £160bn of cash that could be invested in the economy left on the table. The changes will let employers take surplus cash from their pension schemes to either invest in supplies and equipment for their business or to hand more benefits to employees.