Will Rachel Reeves’ pension shake-up really boost growth?

As Chancellor Rachel Reeves prepares to deliver her first Mansion House speech in the City of London tonight, one word is set to be emphasised: growth.

‘Last month’s Budget fixed the foundations to restore economic stability and put our public services on a firmer footing,’ she will tell her audience of bankers and City workers. ‘Now we’re going for growth.’ Her sights are set on pensions. The Chancellor is expected to announce what is being billed as the ‘biggest set of reforms to the pensions market in decades,’ with the Treasury estimating these changes could unlock up to £80 billion in additional investment for Britain.

Drawing on pension models from Canada and Australia, Reeves aims to increase the size of public sector pension funds – a factor she believes has held funds back from making larger, more fruitful investments. The Local Government Pension Scheme will be overhauled, merging the UK’s 86 council pension schemes into several ‘pension megafunds’ run by investment specialists rather than local government, in a bid to secure better returns.