Larger pension schemes with 'enhanced' asset ownership capability could increase retirement savings by between £20,000 (5 per cent) and £100,000 (35 per cent) over a typical working life of 40 years, according to Invesco and People's Pension.

The report, Built to Grow: How Asset Ownership Can Improve Outcomes and Help the UK Economy, suggested that scale, capability and governance could combine to increase annual investment returns by 0.25 to 0.75 percentage points, rising to 1.25 percentage points in the most favourable scenario.

Based on scenario modelling, the report estimated that creating a larger group of capable asset owners could add £75bn to £110bn a year to the UK economy over the next 20 years.

In addition, the report suggested between £30bn and £90bn could be directed into UK private markets over time.

The report argued that consolidation reforms, the Value for Money framework and Mansion House measures are creating the conditions for a new generation of pension asset owners.

However, it stressed that the objective should be to build stronger investment institutions, with scale supported by effective governance, investment expertise and decision-making capabilities.

The report also proposed a "hybrid" asset ownership model, under which schemes retain responsibility for strategic investment decisions while working with specialist providers to access additional expertise and capabilities.

Commenting on the findings, People’s Pension CIO, Dan Mikulskis, said: "The UK has an opportunity to develop a pensions system that works even harder for millions of savers and for the wider economy.

“This research shows that scale really does matter, but what matters even more is how that scale is used.

“Greater asset ownership has the potential to improve retirement outcomes while also supporting investment in Britain's future."

The report examined the potential impact of UK pension schemes adopting asset ownership models, similar to those used by Canada's Maple 8 funds and Australia's superannuation sector.

Invesco senior managing director, co-head of investments, Tony Wong, said: “A key insight from this research is that successful asset ownership does not follow a single model.

“Around the world, leading pension organisations have adopted different approaches shaped by their governance, regulatory and market environments.

“As schemes grow, scale creates greater strategic optionality, but it should not be viewed as a choice between insourcing and outsourcing.

“The most successful organisations often combine strong strategic oversight with specialist capabilities in different ways to support their long-term objectives.”

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