Millions of people could see a £6,000 boost to their pension pots

THE CHANGES WILL AFFECT MANY WORKERS WHO PAY A PORTION OF THEIR SALARY INTO A PENSION FUND EACH MONTH 10:55, 29 May 2025 Millions of people could see a £6,000 boost to their retirement pots

as part of Government plans to bolster British pension plans. Proposed reforms to the Pension Schemes Bill will require smaller multi-employer Defined Contribution pension schemes to join

forces and create “megafunds”. The changes will affect many workers who pay a portion of their salary into a pension fund each month, as the Government plans to double the number of UK

pension megafunds by 2030, managing at least £25 billion in assets. This could result in an investment of £50 billion in infrastructure projects, which the Treasury hopes will boost the

economy and drive up higher returns for savers. Chancellor Rachel Reeves said: “We’re making pensions work for Britain. These reforms mean better returns for workers and billions more

invested in clean energy and high-growth businesses – the plan for change in action.” The new schemes are expected to save £1 billion a year through economies of scale and improved

investment strategies, the Treasury said. Article continues below Under the reforms, the local government pension scheme will be consolidated, reducing the current 86 administering

authorities into six pools. Deputy Prime Minister Angela Rayner, Secretary of State for Housing, Communities and Local Government, said: “The untapped potential of the £392 billion local

government pension scheme is enormous. “Through these reforms we will make sure it drives growth and opportunities in communities across the country for years to come – delivering on our

plan for change.” Sir Steve Webb, a former Liberal Democrat pensions minister who is now a partner at consultants LCP (Lane Clark & Peacock), described it as a “truly a red letter day

for pension schemes, their members and the companies who stand behind them”. He said: “The Government has clearly been bold in this area and this opens up the potential for this surplus

money to be used more productively to benefit scheme members, firms and the wider economy.” One of Labour's earliest moves after taking office last year was the announcement of a

pension review. The possibility of a "megafunds" plan was first announced in November, when the Government claimed the changes "could unlock around £80 billion of investment

for infrastructure projects and businesses of the future". Article continues below The UK pension system is one of the largest in the world – with the Local Government Pension Scheme

and Defined Contribution market set to manage £1.3 trillion in assets by the end of the decade. 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." Pensions Minister Emma Reynolds said: "Harnessing the power of this multi-billion-pound

industry is a win-win, benefiting future pensioners, and our wider economy. These reforms could unlock £80 billion of investment into exciting new businesses and critical

infrastructure."