UK pension system faces big changes as new mega-funds plan emerges
Treasury chief plans to merge billions in pension assets into mega-sized funds. Changes aim to boost UK growth but experts point-out risks for both taxpayers and retirement savers
Rachel Reeves plans to shake-up UK pensions tomorrow at her Mansion House talk - a move thats getting mixed feedback from money experts. The Treasury boss wants to join-up 86 different local pension schemes into mega-funds (which sounds like a big-time change for the system)
The reform aims to move £20bn into local growth projects: however experts raise red flags about the whole idea. Andrew Tully from Nucleus Financial points-out a key issue; “If investments dont work out the taxpayer ends up paying the bill“ Meanwhile ex-Bank of England expert Neil Record agrees saying taxpayers are “on the hook“ when things go wrong
These mega-funds would need special rules about their size and how they work. Tom Selby from AJ Bell sees problems with mixing government plans with peoples savings; retirement money shouldnt just be used as a tool for UK growth. The plan wants to get £80bn of new money working but theres more to think about
Tom McPhail from Lang Cat makes an interesting point:
Nobody would deny that merging local schemes makes sense but Im not sure Id go to Rachel Reeves for investment advice
Jon Greer at Quilter thinks finding good projects might be hard - there may not be enough safe places to put all this cash. The mega-funds could end-up taking bigger risks just to find somewhere to invest their money
