Pension law change to add £29,000 to pensioners' savings confirmed by Rachel Reeves

A new law set to add an average of £29,000 to pensioners' savings in retirement is set to be introduced in a few months, Chancellor Rachel Reeves confirmed tonight. The Chancellor on Tuesday night told key members of the financial service industry that a new law announced last year, aiming to increase private pension savings, is set to be put in place soon.

In a speech at Mansion House in which Ms Reeves talked about pushing savers to invest in the stock market, as well as the trade deals the government has signed, she stressed that the new bill is progressing and set to be made law shortly. The hope is that by investing more pension funds into the UK, the economy will grow and in turn boost pensioners' savings in retirement.

During her speech tonight, she said: "Last year at Mansion House, I set out an overhaul of our pensions system and the Pension Schemes Bill, led by my colleague the Pensions Minister, will be signed into law in the next few months.

The creation of Defined Contribution and Local Government Pension Scheme megafunds will mean larger and more powerful pots of funding invested productively across the country.

"We have a duty to maximise the potential of people's pension savings.

"And our Bill reserves the power to mandate pension funds to invest productively in a wider range of assets sending a clear signal that pension funds and this government are united in our determination to deliver higher returns for savers and more investment for the economy."

Ms Reeves added that businesses including Tesco and Octopus Energy have already made changes to their pension schemes as a result of the changes.

Work and pensions minister Torsten Bell previously said the Pension Schemes Bill will create a system which ensures "comfortable retirements", with workers on an average salary seeing a £29,000 boost.

The Bill will create multi-employer defined contribution scheme "megafunds", managing at least £25 billion in assets within the next five years.

He said that "someone on average earnings saving over their career, could see their retirement pot boosted by £29,000 thanks to the high returns this Bill supports, that is a significant increase and something that should matter to all of us".

Shadow minister Mark Garnier said the Conservatives agreed with much of the Bill, but raised concerns about the power to "mandate pension funds to invest into Government priorities", arguing this "goes against trustees' fiduciary duties".

Conservative former minister Kit Malthouse criticised the Bill, saying: "While it is wrapped in the warm words of reform and modernisation, actually what this Bill does is centralise control, it unsettles previously settled rights, and it risks disenfranchising precisely those people that it purports to help and assist."