Labour pledge pensions review in bid to boost UK growth
Labour would review the UK’s entire pensions system in a bid to channel billions in retirement savings towards the nation’s growth, Rachel Reeves has said.
The shadow chancellor said her party would go further in power than Chancellor Jeremy Hunt has promised with the Mansion House reforms, in a turbo-charge offer to UK firms.
According to the ONS, the UK’s pension market is worth around £2.5tn — one of Europe’s largest — but schemes have favoured offshore markets and gilt purchasing over SMEs.
Ahead of next week’s Autumn Statement, Reeves revealed a string of proposals for Brits’ pensions plans, including greater regulatory powers to tackle poorly performing funds.
She said Labour would review the whole landscape to shore up its “full potential”, from defined contribution (DC) schemes in the private sector and defined benefit alternatives.
Reeves told journalists, as reported by the Financial Times: “The economy is not working — growth is the missing ingredient of this economy.”
It comes as wider political unity emerges over the growth issue, which features both Prime Minister Rishi Sunak’s five pledges and Labour leader Sir Keir Starmer’s five missions.
While the Liz Truss-backed Growth Commission, which calls UK growth “necrotic” published its first report today, warning that GDP growth may stay at just one per cent for 20 years.
Hunt’s Mansion House plans, revealed in July, called on nine major DC pension providers to allocate at least five per cent of their top funds to unlisted equities by 2030 to unlock £50bn.
Now Reeves has called for a government-backed scheme for DC funds to invest alongside the British Business Bank, a state-owned investor, into growing UK-based companies.
But she stressed it should not be made compulsory, adding: “I don’t think mandating is the right thing to do.”
The Conservative Party and the Treasury have been contacted for comment.