Why I'm not mega excited about Reeves's pension play

The chancellor aims to free £80bn of investment by pooling funds. But are savers being overlooked in pursuit of growth?

- JAMES MOORE

When a government launches a "big idea" in a wave of hype, my stock response is this: be afraid. Be very afraid. Especially when it involves pensions, a field that has created more potholes than a typical British B-road at the end of an icy winter.

This brings us neatly to pension “megafunds”, Rachel Reeves’s big idea for unlocking the cash for the investment that the UK so direly needs. Chronic under-investment is a problem that has plagued the UK economy for years, especially when compared to its chief competitors. The chancellor deserves credit for recognising that and for attempting to find solutions.

But do the billions of pounds held by the nation’s pension funds represent a good one? Creating super-sized funds in the hopes that they will invest in the British economy isn’t a new idea. It was under consideration by the Cameron administration; Jeremy Hunt was looking at doing more with it, too. But it is fair to say that Reeves has lit a fire under it.

At last night’s annual Mansion House dinner, an audience of City suits and other worthies heard about how she plans to keep it burning bright via next year’s Pension Schemes Bill. Her megafunds will be created by pooling assets from the 86 separate local government pension schemes, which offer members guaranteed payouts when they retire.