Rachel Reeves to force pension bosses to pool cash to give teachers bigger retirement pots

28 May 2025, 07:37 | Updated: 28 May 2025, 08:06

By Natasha Clark

@NatashaC

Rachel Reeves will force pension bosses to pool their cash in a bid to give teachers and police officers a better retirement.

The Chancellor has given the green light to force pensions providers to create massive 'mega-funds' to help them grow their assets more.

Local government pensions schemes will also be forced to set local investment targets for the first time to boost local communities.

Ministers hope that will create an extra £30billion of extra investment growth, boosting local economies and helping grow pension pots too.

They'll be forced to put a certain percentage of their funds into local projects - such as infrastructure, high streets and small firms.

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The idea was first floated by the Chancellor in last year's mansion house speech, where she dubbed it the biggest pension reforms in a decade.

The government hopes it will help lift the pensions of lower paid women, who mostly use the £392 billion scheme.

6.7million civil servants - including those working for councils, police authorities, universities and schools, currently use the Local Government Pension Scheme.

Currently, the 86 administering authorities manage fund assets through eight pools, who get to decide where to invest their money.

The move will be recommended in the final report of the pensions investment review, which is out later this week.

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Starmer to look at making more pensioners eligible for winter fuel allowance

And there will be a law change contained in the Pensions Bill, due to be brought to the Commons in the next month.

The Chancellor's facing pressure to lay out exactly how and when they will alter the winter fuel payments, as first announced by the Prime Minister last week.

He said he wanted more pensioners to become eligible - but no changes are expected before the Budget as the Chancellor wants to find the cash to pay for it.

Ministers may totally reverse the cuts, which removed hundreds of pounds of cash from pensioners to help them pay their bills.