Image: Rachel Reeves wants to reform pensions. Pic: PA
Almost 90 local government pension pots will be grouped together, with defined contribution schemes merged and assets pooled together.
This is part of the government’s plan to increase economic growth through investing in infrastructure.
Pension schemes get greater returns when they reach around £20bn to £50bn as they are “better placed to invest in a wider range of assets”, according to the government.
This is backed up by evidence from Canada and Australia, the government argues – with Canada’s schemes investing four times more in infrastructure, and Australia three times more compared to the UK’s defined contribution schemes.
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Ms Reeves said it marks “the biggest set of reforms to the pensions market in decades”.
The chancellor added the changes would “unlock tens of billions of pounds of investment in business and infrastructure, boost people’s savings in retirement and drive economic growth so we can make every part of Britain better off”.
However, Tom Selby, the director of public policy at financial company AJ Bell, said: “There needs to be some caution in this push to use other people’s money to drive economic growth. It needs to be made very clear to members what is happening with their money.”
The government says the funds will be regulated by the Financial Conduct Authority and will need to “meet rigorous standards to ensure they deliver for savers”.
The Local Government Pension Scheme in England and Wales will manage assets worth around £500bn by 2030. These assets are currently split across 86 different administering authorities, with local government officials and councillors managing each fund.
Under the government plans, the management of local government pensions and what they invest in will be moved from councillors and local officials to “professional fund managers”.
This will allow them to invest more in assets such as infrastructure, supporting economic growth and local investment on behalf of the 6.7 million public servants, the government said.
Defined contribution pension schemes are set to manage £800bn worth of assets by the end of the decade.
There are around 60 different multi-employer schemes, each investing savers’ money into one or more funds. The government will consult on setting a minimum size requirement for these funds.
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Businesses cautious – but pensions sector backs plans
Businesses will need to be reassured that the government’s plans are watertight following the fallout from the budget, according to the trade group the Confederation of British Industry (CBI).
The CBI’s chief economist Louise Hellem said: “While the chancellor is right to concentrate on mobilising investment, putting pension reform to work for the government’s growth mission, unlocking investment also needs competitive and profitable businesses.
“With the budget piling additional costs on firms and squeezing their headroom to invest, the government needs to work hard to regain the confidence in the UK as a place businesses and communities can succeed.
“Pension schemes will want to operate within a UK economy that is prospering.”
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But key parts of the pensions sector gave their backing to the government’s plans, including Standard Life, Royal London, Local Pensions Partnership Investments and the Pensions and Lifetime Savings Association.
Deputy Prime Minister Angela Rayner said: “This is about harnessing the untapped potential of the pensions belonging to millions of people, and using it as a force for good in boosting our economy.”
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The UK will buy at least 12 F-35 stealth jets that can carry nuclear warheads in the most significant strengthening of its nuclear capability in a generation, the government has said.
Today, Sir Keir Starmer will tell a summit of NATO allies in The Hague that the new squadron will join an alliance mission that can be armed with US nuclear weapons.
The dramatic move will doubtless draw condemnation and concern from Russia and China.
But it comes at a time of growing global insecurity – and as the prime minister and his European and Canadian counterparts scramble to convince Donald Trump they are serious about bolstering their ability to defend Europe, instead of overly relying on the United States.
The US president, a long-standing NATO sceptic, raised questions about whether he would uphold the alliance’s founding Article 5 principle – that an attack on one is an attack on all – before he even arrived in the Dutch city last night.
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‘There’s numerous definitions of Article 5’
An urgent need to keep Mr Trump on side has prompted NATO allies to agree to increase spending on defence and national resilience to a new target of 5% of GDP by 2035.
As part of this push to rearm, Sir Keir will give the Royal Air Force the ability to carry airborne nuclear warheads for the first time since the 1990s.
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“In an era of radical uncertainty we can no longer take peace for granted,” he said.
“These F-35 dual capable aircraft will herald a new era for our world-leading Royal Air Force and deter hostile threats that threaten the UK and our allies.
“The UK’s commitment to NATO is unquestionable, as is the alliance’s contribution to keeping the UK safe and secure, but we must all step up to protect the Euro-Atlantic area for generations to come.”
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What is NATO’s 5% defence spending goal?
It was not immediately clear when the F-35 jets would be bought or how much they will cost, but the new squadron will be part of a NATO-led nuclear deterrence mission.
That is in contrast to the UK’s national nuclear deterrence, based on a fleet of four nuclear-armed submarines, though they too are used to defend the whole of the alliance.
Mark Rutte, the head of NATO, applauded the plan – saying: “The UK has declared its nuclear deterrent to NATO for many decades, and I strongly welcome today’s announcement that the UK will now also join NATO’s nuclear mission and procure the F-35A.
“This is yet another robust British contribution to NATO.”
Image: Sir Keir watches a demonstration by troops as he visits the Netherlands marines training base. Pic: AP
Aircraft operated by a small number of NATO countries, including Belgium, Germany and the Netherlands, are cleared to carry US-provided nuclear weapons in a war.
The RAF and the Royal Navy already operate F-35B jets that can fly off Britain’s two aircraft carriers, but they are not equipped to drop nuclear warheads.
The new planes will be the F-35A variant, operated by the air force, that take off from land but can fly further and be armed with nuclear or conventional weapons.
The government said they would all be based together at RAF Marham in Norfolk.
The government has long planned to purchase a total of 138 F-35 aircraft, but has so far only acquired around three dozen – seven years since the first jets entered service.
The decision to purchase 12 of the A-variant does not mean extra aircraft.
It just means a diversification in the fleet – something the RAF has long been pushing for – though it’s a decision some in the Royal Navy have long pushed back against, believing it would reduce even further the number of the B-version that operate from their carriers.