How Reeves’s plan to boost UK investment using pensions could cost you thousands

15 comments

1. [Pension](https://inews.co.uk/topic/pensions?srsltid=AfmBOoqce30kEQ4rQ33nhb-bpHGnLpG2fCjOgvBZbAowiTe7saIQSEqZ&ico=in-line_link) reforms to increase UK investment as part of the [Government’s economic growth mission](https://inews.co.uk/news/politics/rachel-reeves-christmas-miracle-boost-economy-3448374?srsltid=AfmBOoriWjEjmk6qz56_LSPNFqGHtZLGrl1IPN4Ny_JF41Htf5R1OGPX&ico=in-line_link) could leave savers thousands of pounds worse off in retirement, experts have warned.

   The Chancellor’s push for more domestic investment – dubbed “pension fund nationalism” by some commentators – will risk savers’ money in the name of political objectives, *The i Paper* has been told.

   In her Mansion House speech in 2024, Rachel Reeves set out plans to force pension funds to combine into “megafunds”, saying they could unlock £80bn of investment in the UK.

   By pooling the pots together, the Chancellor hopes it will give pension schemes the firepower to invest in a broader range of UK assets, including infrastructure.

   Under the [proposals](https://inews.co.uk/news/politics/pensions-dashboard-not-ready-years-after-announced-3534672?srsltid=AfmBOorchQNNCnXJm4pqQwk6iAB6F-niSgVCQ7utn0rqGPJ3E5e8C-mT&ico=in-line_link), the UK would introduce a minimum size for defined contribution pension schemes, a type of retirement savings plan where the amount someone receives in retirement depends on how much they and their employer have invested – and how well that investment has performed. Most people working in the private sector have this type of pension.

   The local government pension scheme, a large public sector scheme for people working with and for local government, will have its 86 separate funds condensed into fewer, bigger pots.

   The push for UK investment and bigger pension funds will affect both defined contribution (DC) schemes and defined benefit (DB) schemes.

   DB schemes, also known as final salary pensions, offer guaranteed returns based on the length of someone’s employment and their final salary – providing a guaranteed income for life. These are more common in the public sector.

   But Tom Selby, head of public policy at investment platform AJ Bell, warned that “conflating” a government goal of driving investment in the UK and people’s retirement outcomes “brings a danger because the risks are all taken with pensioners’ money”.

   This is because pension funds make investment decisions to get the best outcomes for savers, which has limited investments in UK-based infrastructure projects with uncertain returns, Selby said.

   “The desire to get more pension money invested in the UK is understandable, but my overarching concern is that the needs of the saver, whose money is ultimately going to be risked, will be forgotten about,” he said.

   There needs to be “some caution” in “this push to use other people’s money to deliver economic growth”, which could go wrong.

   “Ultimately, the best way to encourage capital flows to UK businesses is to pursue reforms aimed at making the UK an attractive place to invest, rather than simply forcing people to invest here,” he added.

   # Why experts are worried

   Around 20 per cent of workplace DC assets are invested in the UK, down from around 50 per cent a decade ago, according to the Department for Work and Pensions.

2. Do not trust the government with your retirement.

   It’s obvious they will use the money to invest in unprofitable “green” projects

   Instead setup a SIPP and purchase a global tracker fund

3. We want to let other people play the Stock Market with your savings.

   RReeves

4. Can I confirm this is for public sector pensions only?

   Even if, how would someone opt out of this idiocy?

5. Will this effect private workplace pensions that are currently invested in worldwide stocks? Or just government pensions? 

   And will it be optional or mandatory?

6. It could also make you thousands. What a nothing statement.

7. No one has to use the default fund. If it happens it effects the default choices.

8. iNews, which publishes the Daily Mail – yawn

9. Common sense, obvious reforms. Ignore our hapless media scaremongering.

10. Considering how badly she’s already done with our finances….she better stay well away from our pensions!!!😡

11. Actually the Tories tried to force pensions to buy Government bonds to fund their corrupt PPE and other contracts. The Tories could have offered the nuclear funding deal to pension schemes and instead offered the RPI+5% deal to China. Wonder what the kick-back on that was?

    Done right we could issue bonds with a Government backing and it will earn more and be a better match for pension liabilities.

    But no, locking money up and giving returns to common people doesn’t sit well with the billionaires that own papers and need “churn” so they can get a kick back every time the money is reinvested.

12. Glad I’ve got my lump sum.

13. >The Chancellor’s push for more UK investment by pension funds puts savers’ money at risk, experts warn

    I thought investments always carried risk. The value can go down as well as up, no?

14. Very good and important reforms. If Bank of England pensions have been invested mainly into US stocks it would be not surprising for them to do everything to trash the pound and get an extra return from US dollar appreciation. Considering that the pound lost half of its value in the past 15 years it could be the result of allocation of their employees assets that created this trend.

15. It’s funny. The Tories fucked this country over for 14 years but the bad guys are obviously those making difficult decisions to try get us out of this mess.

Comments are closed.