Rachel Reeves targets Canada-style pension model in UK

The Chancellor will meet Canadian pension fund representatives in Toronto on Wednesday amid plans to consolidate local government schemes.

Rachel Reeves said a Canada-style model could ‘fire up’ the UK economy (Jonathan Brady/PA) (PA Wire)

The Government is considering consolidating local government pension schemes to pool their £360 billion of resources into a model similar to that of Canada.

Chancellor Rachel Reeves is meeting representatives of the so-called Maple Eight group of Canadian retirement funds in Toronto on Wednesday.

Funds like the Ontario Teachers’ Pension Plan and the Canada Pension Plan are significant infrastructure investors, from which Ms Reeves has said she wants UK schemes to learn.

England and Wales’ local government pension scheme is fragmented into 86 individual funds, across about six million members.

I want British schemes to learn lessons from the Canadian model and fire up the UK economy, which would deliver better returns for savers and unlock billions of pounds of investment

Chancellor Rachel Reeves

Ms Reeves said: “The size of Canadian pension schemes means they can invest far more in productive assets like vital infrastructure than ours do.

“I want British schemes to learn lessons from the Canadian model and fire up the UK economy, which would deliver better returns for savers and unlock billions of pounds of investment.

“We’re already beginning to see schemes announce plans to invest. That’s a vote of confidence in our work to fix the foundations of the economy, rebuild Britain and make every part of our country better off.”

Ms Reeves has already announced that she will review the sector, looking to find ways to boost investment in the UK and deliver higher returns for people’s pension pots.

In her first Mansion House address she will set out how it can work with regulators to grow, and possibly consolidate.

Investment firms including Legal & General, Aviva and Phoenix have welcomed the industry review, which was announced in July.

Last week Phoenix and Schroders launched their Future Growth Capital co-investment fund, designed to invest up to £20 billion in the UK over the next decade.