Chancellor Eyes ‘Canadian Model’ Pension to Boost UK Economy

The government is hoping to adopt “the Canadian model” pension schemes to help “fire up the UK economy,” Chancellor of the Exchequer Rachel Reeves said on Wednesday.
The size of Canadian pension schemes means they can “invest far more” than their British counterparts, Reeves said.
The chancellor made the remarks before hosting a roundtable in Toronto with Canada’s so-called Maple 8 group of retirement funds.
Funds like the Ontario Teachers’ Pension Plan and the Canada Pension Plan are significant infrastructure investors, from which Reeves has said she wants UK schemes to learn.
England and Wales’s local government pension scheme is fragmented into 86 individual funds, across about six million members.
In a statement published on Wednesday, the chancellor said: “The size of Canadian pension schemes means they can invest far more in productive assets like vital infrastructure than ours do.
“I want British schemes to learn lessons from the Canadian model and fire up the UK economy, which would deliver better returns for savers and unlock billions of pounds of investment.
“We’re already beginning to see schemes announce plans to invest. That’s a vote of confidence in our work to fix the foundations of the economy, rebuild Britain and make every part of our country better off.”
In her first Mansion House address she will set out how she will work with industry and regulators to boost economic growth.
Last month, the chancellor has launched a review of British pension schemes, and outlined her plans to pool pension funds and get them to invest in infrastructure, small businesses, and other projects.
The government has promised to introduce a Pension Schemes Bill, which includes the automatic consolidation of small pension pots and a value-for-money framework to improve governance.
The Treasury has said the measures could boost an average pension pot by over £11,000.
The department is also considering other ways to encourage bigger schemes as well as the mandatory consolidation of the Local Government Pension Scheme in England and Wales.
Investment firms including Legal & General, Aviva and Phoenix have welcomed the industry review, which was announced in July.
Last week Phoenix and Schroders launched their Future Growth Capital co-investment fund, designed to invest up to £20 billion in the UK over the next decade.
Also in last week, Reeves cancelled a raft of infrastructure projects including roads and hospitals after saying she had found a £22 billion black hole in the budget.