Chancellor of the Exchequer Rachel Reeves is exploring the possibility of adopting a Canada-style pension reform aimed at revitalising the UK economy.
Reeves expressed her intent to “learn lessons” from Canada’s successful model, which heavily invests pension funds into infrastructure projects to drive economic growth.
This move follows a recent review of the UK pension sector, launched by Reeves last month, as part of her broader strategy to strengthen the economy.
During a three-day trip to North America this week, Sky News revealed that Reeves would meet with Canadian pension fund leaders in Toronto to discuss potential reforms. In Canada, pension schemes are significantly consolidated, allowing them to channel substantial investments into productive assets such as infrastructure.
Currently, local government pension schemes in England and Wales are divided into 86 individual funds, collectively managing around £360 billion for approximately six million members. Reeves highlighted the benefits of larger, consolidated pension schemes, such as those in Canada, which can invest more effectively in growth-driving assets.
What does the future look like?
“The size of Canadian pension schemes means they can invest far more in productive assets like vital infrastructure than ours do,” Reeves stated. “I want British schemes to learn from the Canadian model and fire up the UK economy, which would deliver better returns for savers and unlock billions of pounds of investment.”
Reeves also noted that some UK pension schemes have already begun to announce plans to increase investment, reflecting confidence in the government’s efforts to rebuild the economy.
The chancellor is expected to provide more details on her pension reform plans during her upcoming Mansion House address. The initiative has garnered support from major investment firms, including Legal & General, Aviva, and Phoenix, which have welcomed the review since its launch in July.
This focus on pension reform aligns with the government’s broader economic goals, as emphasised in the recent King’s Speech. Reeves’ push for reform is seen as a critical step in ensuring that the UK economy remains competitive and resilient in the years to come.
