The UK government has outlined major reforms to the pensions sector, aiming to unlock billions for economic growth and improve retirement outcomes.
Central to the plans is the creation of over 20 consolidated pension “megafunds”, each managing at least £25 billion by 2030.
These funds will be encouraged to invest more in UK infrastructure, housing and start-ups, with 5% of assets directed into domestic projects.
Seventeen major pension firms have already signed a voluntary agreement to allocate 10% of their assets to unlisted investments.
The reforms will affect both defined benefit schemes, such as local government pensions, and defined contribution schemes, where returns depend on investment performance.
While the Treasury hopes not to enforce the changes, it is including a legislative backstop. Industry voices have welcomed the reforms' potential to boost returns and improve governance, though some caution against mandated investment directions.
The proposals will be set out in the forthcoming Pension Schemes Bill.