Chancellor Looks to Canadian Pension Plan as Economic Growth Strategy for UK
Rachel Reeves emphasized the importance of UK pension funds learning from Canadian schemes, highlighting their larger size and increased ability to invest in infrastructure projects.
Chancellor of the Exchequer Rachel Reeves stated on Wednesday that the government aims to adopt the pension schemes of Canada, known as “the Canadian model,” to stimulate the UK economy.
Reeves pointed out that the size of Canadian pension schemes allows them to invest significantly more compared to British pension funds.
Prior to hosting a roundtable discussion in Toronto with Canada’s Maple 8 retirement funds group, the chancellor made these remarks.
Pension funds like the Ontario Teachers’ Pension Plan and the Canada Pension Plan are major investors in infrastructure projects, which Reeves wants UK schemes to emulate.
Currently, the local government pension scheme in England and Wales is fragmented into 86 individual funds with around six million members.
In a statement released on Wednesday, the chancellor stated, “The size of Canadian pension schemes allows them to invest far more in productive assets like critical infrastructure than our own.”
Related Stories
“I want British schemes to learn lessons from the Canadian model and boost the UK economy, leading to better returns for savers and unlocking significant investment opportunities,” Reeves added.
“We are already seeing schemes announcing investment plans, signaling confidence in our efforts to strengthen the economy’s foundation, rebuild the nation, and improve every part of the country,” she continued.
In her inaugural Mansion House address, she will outline her plans to collaborate with industry and regulators to enhance economic growth.
Last month, the chancellor initiated a review of British pension schemes, outlining strategies to merge pension funds and encourage investments in infrastructure, small businesses, and other initiatives.
The government has pledged to introduce a Pension Schemes Bill that includes consolidating small pension pots automatically and implementing a value-for-money framework to enhance governance.
According to the Treasury, these measures could potentially increase an average pension pot by over £11,000.
Additionally, the department is exploring ways to promote larger schemes and mandate the consolidation of the Local Government Pension Scheme in England and Wales.
Investment firms like Legal & General, Aviva, and Phoenix have welcomed the industry review announced in July.
Last week, Phoenix and Schroders unveiled their Future Growth Capital co-investment fund, aiming to invest up to £20 billion in the UK over the next decade.
Recently, Reeves scrapped several infrastructure projects, including roads and hospitals, after discovering a £22 billion shortfall in the budget.
PA Media contributed to this report.
