Pension Reform, what does it mean for your money?

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Big plans

The Chancellor will be announcing plans this evening in a Manion House speech, in what’s anticipated to be the biggest pension reform in decades. It’s been suggested that she is going to lay-out plans to merge local government pension scheme assets and consolidate DC schemes into a smaller number of larger ‘mega funds’. Defined Contribution (DC) schemes are what most private sector workers use to fund their retirement.

Reeves’ argument for this change is to unlock up to £80bn of investment into infrastructure projects and businesses. The Government will bring forward a new Pension Scheme Bill which will merge the 86 council pension schemes into a smaller number of massive funds.

What does it mean for your pension?

This depends on the type of pension you have, most private sector workers will experience the results of this change when they retire, simply based on the size of the fund they are invested in. And when it comes to investment funds, the bigger the better.

Economic growth

Pension funds invest in businesses and projects, meaning the more investment power these funds have to invest in UK businesses, the more the economy grows. However, there is a potential impact on the small to medium sized business sector, as these ‘mega funds’ tend to invest in large businesses, avoiding smaller ones. Equally it’s a possibility the UK simply doesn’t have enough large-scale infrastructure projects to invest in currently.

The details of this evening’s announcement will be closely watched!

Skills

Posted on

November 14, 2024