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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. 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."