'Too small' UK pension funds hold back growth, says Rachel Reeves

Shadow chancellor calls for reforms to encourage saving and investment

The UK's "too small" pension funds are holding back economic growth, according to shadow chancellor Rachel Reeves.

In a speech to the Pensions and Lifetime Savings Association (PLSA) annual conference, Reeves said that the UK's pension system was "not fit for purpose" and needed to be reformed to encourage saving and investment.

Reeves said that the average UK pension fund was only around one-third the size of the average US pension fund, and that this was a major drag on the UK economy.

"Our pension funds are too small, and this is holding back our economy," Reeves said. "We need to reform our pension system to encourage saving and investment, and to ensure that everyone has a decent retirement income."

Reeves proposed a number of reforms to the UK pension system, including:

• Increasing the automatic enrollment threshold so that more people are saving into a pension.
• Reforming the tax relief system for pensions to make it fairer and more effective.
• Introducing a new "lifetime ISA" that would allow people to save for retirement and other long-term goals.

Reeves said that these reforms would help to increase saving and investment in the UK, and would lead to higher economic growth.

"We need to make sure that everyone has a decent retirement income, and that our pension system is fit for purpose," Reeves said. "These reforms will help us to achieve both of these goals."