You mean the currently 5% that is determined on national investment?
Rachel Reeves wrote this article for Mail on Sunday
My mission to aid investment, boost pensions - and to spread prosperity to all
By Rachel Reeves, Chancellor of the Exchequer
“DURING the General Election campaign, I promised readers of The Mail on Sunday that I would lead the most pro-growth, pro-business Treasury in our country’s history - and I meant it.
That is why in my first 72 hours as Chancellor, I announced the biggest reform of our planning system in a decade so we could get Britain building again. It is why in my first week I established a new National Wealth Fund that would work alongside business to unlock billions of pounds in private sector investment in the industries of the future.
It is why we have introduced a new law to bring stability back to our economy so never again can we see a re-run of Liz Truss’s disastrous mini-Budget. And it is why I have backed the biggest overhaul in regulation of the UK Stock Exchange in 30 years to boost our global competitiveness.
But I know we must go further and faster. I am under no illusion to the scale of the challenge we face. We have inherited the worst set of economic circumstances since the Second World War. Taxes are at a 70-year high, national debt doubled under the Conservatives and public services have been pushed to breaking point.
We cannot turn that around overnight. It is going to take time and some tough decisions. But let me be clear: I am ready to take those decisions.
There are some who would argue that now we are in power we can abandon the platform that we were elected on. That we can turn on the spending taps and follow the Conservative Party’s path of unfunded promises that we know cannot be delivered.
I profoundly disagree. The mandate we were elected on was clear and I stand by it. We cannot tax and spend our way to prosperity, nor will we play fast and loose with the public finances. Instead, we need to back the wealth creators and deliver for the British people.
Previous governments have talked about a big bang on tax or regulation. I want to lead a big bang on growth because that is the only way we can fix the foundations, so we can rebuild Britain and make every part of our country better off.
That is why I can announce today our latest set of reforms to unlock growth, boost investment and deliver for pensioners.
Millions of people across Britain work hard and make sacrifices to save for their retirement, and there are hundreds of billions of pounds worth of assets in UK pension funds. However, not only is the current system not delivering the retirement savings it should be, but it is not doing what it should to support some of our great British businesses.
Conservative governments over the past 14 years have promised action to reform the pension market, but have failed to deliver. Where they have failed, I will act.
That is why I have instructed Treasury officials to launch an urgent review to make recommendations in the coming months for how we can reform the pensions market so it can deliver a better return for savers and ensure successful businesses can get the funding they need to grow, invest and spread prosperity across the UK. It is what other countries are doing and it is what we should be doing.
My demands of this review are clear: I want to boost investment in Britain, increase pension pots and tackle waste in the system. Let me take each of those in turn.
First, I want to see more pension schemes invest in fast-growing British firms. Even a one percentage point shift in the £800billion worth of assets that defined contribution schemes are estimated to manage by the end of the decade could release an extra £8billion of investment.
The same goes for the Local Government Pension Scheme in England and Wales. It is the seventh largest pension scheme in the world, worth £360billion. Its value comes from its 6.6million members, three-quarters of whom are women. This is money that could go towards building vital infrastructure, supporting small businesses and helping to put more back into our towns and cities.
Second, I want to see more done to deliver for pensioners to ensure the savings you make give you security and dignity in retirement. We will introduce new laws to boost some pension pots by more than £11,000 by ensuring schemes are well managed and deliver better value for money.
And we will tackle waste in the system through consolidation and the money spent on fees, including the £2billion spent by the Local Government Pension Scheme. Bringing pension pots together will also make it easier for people to manage their pensions, ending the administrative headache that comes from being part of multiple schemes.
This is only the beginning. If we are to turn our economy around, I know there is more that needs to be done. We need to tackle hospital waiting lists and reform our welfare system so we can help get people back to work. We need to give people more security at work by ensuring they are paid a decent wage. And we need to invest in our education system so we can build a workforce fit for the future.
I know we must repay the trust of those of you who voted for the Labour Party again or voted for us for the first time in your lives. I know we must also work just as hard for those who stayed at home or voted for another party.
But we were elected on a mandate of change and that work has already begun. We are fixing the foundations - and taking the country forward on a decade of national renewal.”
It won’t affect me, but it reads as if she is looking to pension funds to invest in the governments infrastructure projects. What happens if they go tits up, will the government indemnify those pension funds or will pensioners find they are stuffed.
www.pwc.co.uk
