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Rachel Reeves has told City chiefs she plans to create pension \u201cmegafunds\u201d that will \u201cpower growth\u201d in the economy and reward British savers.<\/p>\n
In her first Mansion House speech as Chancellor, Ms Reeves announced plans for the megafunds which she said could bring in \u00a380 billion to invest in businesses and infrastructure.<\/p>\n
The reforms will be introduced through a new Pension Schemes Bill next year, consolidating defined contribution (DC) schemes and pooling assets from 86 local government pension scheme authorities.<\/p>\n
The megafunds will mirror schemes in Australia and Canada, where pension funds take advantage of size to invest in assets that have higher growth potential.<\/p>\n
More often than not, it is Canadian teachers and Australian professors reaping the rewards of investing in British productive assets through their pension schemes, rather than British savers<\/p>\n
Rachel Reeves, Chancellor<\/p>\n
The Chancellor said: \u201cAustralian pension schemes invest around three times more in infrastructure investment compared to defined contribution schemes in the UK and 10 times more in private equity \u2013 including in high-growth businesses \u2013 compared to the UK.<\/p>\n
\u201cOne of the key reasons for this is the much larger size of their funds.<\/p>\n
\u201cWhile our pensions landscape remains highly fragmented, that means many of our pension funds do not have the capacity to invest at the scale required.<\/p>\n
\u201cAnd more often than not, it is Canadian teachers and Australian professors reaping the rewards of investing in British productive assets through their pension schemes, rather than British savers.<\/p>\n
\u201cThat\u2019s not good enough, and we need to change that.\u201d<\/p>\n
She told City chiefs: \u201cWe will take a more proactive approach to working with investors to ensure that capital is directed to the UK\u2019s biggest growth opportunities.\u201d<\/p>\n
During the speech, the Government published its interim pensions investment review.<\/p>\n
\u201cIt sets out our plans to create Canadian and Australian-style megafunds to power growth in our economy,\u201d Ms Reeves said.<\/p>\n
She also pledged to rip up financial red tape, arguing that regulatory changes following the 2008 economic crash have \u201cgone too far\u201d as she\u00a0announced a package of reforms aimed at driving competition across financial services.<\/p>\n
The Chancellor has sent \u201cgrowth-focused remit letters\u201d to the Financial Conduct Authority, Prudential Regulation Committee, Financial Policy Committee and Payment Systems Regulator to push for a greater focus on growth.<\/p>\n
We cannot take the UK\u2019s status as a global financial centre for granted<\/p>\n
Rachel Reeves, Chancellor<\/p>\n
She described the financial services sector as \u201cthe crown jewel in our economy\u201d.<\/p>\n
\u201cBut we cannot take the UK\u2019s status as a global financial centre for granted,\u201d she said.<\/p>\n
\u201cIn a highly competitive world we need to earn that status and we need to work to keep it.\u201d<\/p>\n
She said it was \u201cright\u201d to make regulatory changes after the global financial crisis but that they have resulted in a system that \u201csought to eliminate risk-taking\u201d.<\/p>\n
\u201cThat has gone too far and, in places, it has had unintended consequences which we must now address,\u201d she said.<\/p>\n
The Treasury said \u201chigh regulatory standards will be maintained\u201d but parts of the system will be \u201crebalanced to drive economic growth and competitiveness\u201d.<\/p>\n
For example, the Government will also consult on replacing the certification regime, which seeks to strengthen market integrity and applies to staff below senior management level, because elements of it have become \u201coverly costly and administratively burdensome\u201d, Ms Reeves said.<\/p>\n
She announced changes to the Financial Ombudsman Service, which deals with complaints between consumers and firms, as part of the shake-up.<\/p>\n
Meanwhile, a pilot scheme will be launched to deliver \u201cdigital gilts\u201d \u2013 tokenised Government bonds that are issued on a blockchain \u2013 in a move to better embrace technology.<\/p>\n
The Chancellor, Home Secretary and Technology Secretary have also written to the tech and telecommunication sectors calling for tougher action in reducing the scale of fraud taking place on their platforms and networks.<\/p>\n
A progress update has also been requested by March 2025 ahead of an expanded fraud strategy.<\/p>\n
Ms Reeves will also commit the Government to publishing the first ever Financial Services Growth and Competitiveness Strategy in the spring, which is aimed at providing long-term certainty for the sector.<\/p>\n
She will propose focusing on five priority areas in financial services to take advantage of the UK\u2019s existing strengths and boost the potential for growth.<\/p>\n
These will be financial technology, sustainable finance, asset management and wholesale services, insurance and reinsurance and capital markets.<\/p>\n
There is so much potential for us to deepen our economic relationship on areas such as emerging technologies. I look forward to working closely with President-elect Trump and his team to strengthen our relationship in the years ahead<\/p>\n
Rachel Reeves, Chancellor <\/p>\n
The Chancellor also called for free trade with the United States under incoming president Donald Trump, and a reset with the \u201cour biggest trading partner\u201d the EU.<\/p>\n
She said: \u201cI will always do what is in our national interest, for our economy, for our businesses and for the British people. That means free and open trade, especially with our most economically important partners.<\/p>\n
\u201cThis includes the United States, our single most important destination for financial services trade.<\/p>\n
\u201cAnd there is so much potential for us to deepen our economic relationship on areas such as emerging technologies.<\/p>\n
\u201cI look forward to working closely with President-elect Trump and his team to strengthen our relationship in the years ahead.<\/p>\n
\u201cAnd of course, our biggest trading partner is the European Union. We will not be reversing Brexit, or re-entering the single market or customs union. But we must reset our relationship.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
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