The Labour Party has promised to offer a “better deal for our future pensioners” with older households set to claim an extra £11,000 in retirement savings.
Chancellor Rachel Reeves, alongside new pensions minister Emma Reynolds, have pledged to unlock billions in investment to bolster pots.
A review conducted by both the Treasury and the Department for Work and Pensions (DWP) will examine how £800billion can be used in productive assets.
According to the Treasury, this will help create better returns for pension savers and raise the average pot by £11,000.
This announcement comes after the inclusion of a Pension Schemes Bill in this week’s King Speech.
The bill in question outlined plans to introduce automatic consolidation of small pension pots and a value-for-money framework to improve governance.
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Reeves outlined her commitment to helping improve the current pensions system from its current iteration.
She explained: “Despite a very challenging inheritance, this new Government is getting on with the job of delivering our mandate to get the economy growing so we can make every part of our country better off.
“The review we are announcing is the latest in a big bang of reforms to unlock growth, boost investment and deliver savings for pensioners.
“There is no time to waste. That is why I am determined to fix the foundations of our economy so we can rebuild Britain and improve people’s lives.”
Reynolds is set to head up the lead the review which has been widely welcomed by providers and experts.
The Pensions Minister said: “Over the next few months the review will focus on identifying any further actions to drive investment that could be taken forward in the Pension Schemes Bill before then exploring long-term challenges to ensure our pensions system is fit for the future.
“There is so much untapped potential in our pensions markets, with an industry worth around £2trillion.
“The measures we have already set out in our Pension Schemes Bill will help drive higher investment and a better deal for our future pensioners.”
Andrea Rossi, the chief executive of investment firm M&G, described the review as being “long overdue”.
He added: “Consolidation, combined with the role of advice, has huge potential to align the interests of savers with the UK’s growth ambition.
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“We look forward to supporting the Government on this landmark review.”
CS Venkatakrishnan, the chief executive of Barclays, noted: “Pensions reforms are critical to unlocking institutional investment in growth equity and, alongside a streamlining of listing requirements, will give a significant boost to UK capital markets and growth.”
Under the previous Government, pension schemes were also targeted as a potential value to bolstering investment in UK businesses.
In March 2024, the previous Chancellor Jeremy Hunt outlined similar to value-for-money reforms cited during the King’s Speech.