Will bigger be better?

FIVE-MINUTE GUIDE TO... PENSION MEGA-FUNDS

- By Harvey Jones

IF YOU ARE a member of a workplace pension scheme, the latest shake-up of the pensions industry could directly affect the future value of your pot, and the quality of your retirement.

Under sweeping reforms set out by Chancellor Rachel Reeves, pension schemes will be encouraged to consolidate into a handful of so-called “mega-funds”, each managing at least £25billion in assets.

The idea, modelled on the vast funds of Australia and Canada, is that bigger schemes can deliver better investment performance and help fund Britain’s economic growth by investing more in UK-based projects.

Reeves claimed large funds are more efficient and could boost the average pension pot by £6,000, but that is far from guaranteed. “These reforms mean better returns for workers and billions more invested in clean energy and high-growth businesses,” she said.

Seventeen of the UK’s largest pension providers have already signed up to the idea voluntarily.