Britain to announce plans to create 'Canadian-style' pension model

financialpost.com:

Chancellor Rachel Reeves will meet bosses of big pension schemes in Toronto on Wednesday, as she seeks to create a “Canadian-style” model in the United Kingdom with massive retirement funds investing in equities and infrastructure.

Reeves wants to unlock the investment potential of the £360 billion local government pension scheme, which has more than 6 million members but is fragmented into 86 individual funds in England and Wales.

If it were a single fund, it would rank among the top 10 biggest funds in the world. Reeves wants the U.K. market to achieve the scale of the megafunds operated in Canada by the so-called Maple 8.

“The size of Canadian pension schemes means they can invest far more in productive assets like vital infrastructure than ours do,” the chancellor said on Tuesday. Achieving this consolidation is a key challenge for Reeves.

Former Conservative chancellor Jeremy Hunt also wanted to build a Canadian-style pensions model in Britain, but progress had been slow.

Reeves has announced a review, overseen by the new pensions minister Emma Reynolds, to look into how to achieve scheme consolidation and put pension funds to use in promoting U.K. growth.

An ally of the chancellor said a new pensions schemes bill would create a “value for money framework” to promote better outcomes for savers.

Reeves has so far not supported “mandating” U.K. funds to invest in certain asset classes. Her allies said there was a “live debate” on the issue, but noted the fiduciary duty on schemes to invest on behalf of their members.

While in opposition last year, Reeves said regulators could intervene to force the merger of smaller schemes. She said she believed retirement plans with less than £200 million in assets may be failing in