Chancellor Rachel Reeves has confirmed an overhaul to the UK pension system to bolster returns for savers during her Mansion House speech earlier this evening.
The Chancellor declared that Britain’s growth ambitions depend on a “fighting fit and thriving” financial services sector, placing the City at the centre of the Government’s economic strategy.
Speaking at her annual Mansion House address to finance leaders, the Chancellor unveiled what the Government describes as the most significant financial services reforms in over a decade.
“Today, I have placed financial services at the heart of the Government’s growth mission, recognising that Britain cannot succeed and meet its growth ambitions without a financial services sector that is fighting fit and thriving,” Reeves told attendees.
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Rachel Reeves has committed to making dramatic changes to the pension system
These reforms, announced in Leeds earlier on Tuesday, aim to enhance UK competitiveness in an increasingly uncertain global economy. The Treasury’s reform package includes plans to reduce regulatory burdens that Reeves said have “gone too far in seeking to eliminate risk”.
Key measures include reforming the ring-fencing regime that currently requires banks to separate retail and investment banking operations, a requirement that sets Britain apart from global competitors.
The Chancellor also criticised how retail investment is currently presented “in a negative light, quick to warn people of the risks without giving proper weight to the benefits”.
Proposed changes include revising risk warning language on investment products to encourage greater participation, particularly among women investors. The Chancellor issued a stark warning against regulatory overreach, urging watchdogs to resist “excessive caution” in their approach.
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Reeves said the Government was fulfilling its commitment, made at last year’s Mansion House speech, to “regulate for growth and not just for risk”.
She concluded with a broader challenge to regulators beyond financial services: “Regulators in other sectors must take up the call I make this evening not to bend to the temptation of excessive caution but to boldly regulate for growth in the service of prosperity across our country.”
The Chancellor emphasised that regulation was acting as “a boot on the neck of businesses, choking off the enterprise and innovation that is the lifeblood of growth”.
She revealed new powers to mandate pension funds to invest in UK assets, describing this as “sending a clear signal” that both Government and industry seek higher returns for savers and increased domestic investment.
The UK pension system is undergoing drastic reforms
However, Reeves expressed confidence that compulsion would prove unnecessary: “But I am confident that I will not need to use that power because firms see the urgency and importance of this as clearly as I do.”
Concluding her speech, the Chancellor said: ““As I look ahead, it is clear that we must do more.
“In too many areas, regulation still acts as a boot on the neck of businesses, choking off the enterprise and innovation that is the lifeblood of growth.
“Regulators in other sectors must take up the call I make this evening not to bend to the temptation of excessive caution but to boldly regulate for growth in the service of prosperity across our country.”