Chancellor, Rachel Reeves, is considering plans to implement a ‘Canadian-style’ pension model in the UK to unlock further investment potential from the Local Government Pension Scheme (LGPS).

Reeves is meeting with representatives from the Canadian ‘Maple Eight’, a group of large-scale pension funds in Canada, amid efforts to increase pension fund investment in the UK economy.

The meeting comes amid reports that the Chancellor is considering the consolidation of funds from across the LGPS.

Ahead of the meeting, Reeves stated that she wanted British pension schemes to learn lessons from the Canadian model to “fire up” the UK economy.

“The size of Canadian pension schemes means they can invest far more in productive assets like vital infrastructure than ours do,” she stated.

“I want British schemes to learn lessons from the Canadian model and fire up the UK economy, which would deliver better returns for savers and unlock billions of pounds of investment.

“We’re already beginning to see schemes announce plans to invest. That’s a vote of confidence in our work to fix the foundations of the economy, rebuild Britain and make every part of our country better off.”

The comments come amid Labour’s push to increase pension investment in UK assets, with the recently announced Pension Schemes Bill and Pension Review seeking to support this aim.

Commenting on the potential emulation of the Canadian model and how it could work for the LGPS, Local Pensions Partnership Investments (LPPI) chief investment officer, Richard J Tomlinson, said that identifying Canda’s Maple Eight as a model for success for the UK was a “strong starting point” to unlock the “enormous potential” within the LGPS.

“Our own analysis shows that aligning more closely with the Canadian model could deliver an additional £16bn of investment into much-needed UK infrastructure development,” he continued.

“This would come, in part, from mirroring the Maple Eight’s asset allocations, which tend to favour private markets.

“However, if the Chancellor is serious about increasing the flow of pension fund capital to the UK more broadly, we must also see a concerted effort to break down barriers to investment.

“Currently, execution and regulatory risks all-too-often slow down or deter investors. The government needs to continue on its path to planning reform and consider formal incentives to encourage investment in assets that help pension funds deliver on their primary fiduciary responsibilities to members.

“The Chancellor’s indication that greater consolidation of LGPS pools is on the cards is also welcome. Further consolidation of funds could help remove needless layers of decision-making and allow investment managers to be more agile.

“With 100 per cent of our client’s funds pooled, we see this in microcosm at LPPI with above-LGPS average returns. Replicated across the LGPS, greater pooling of funds could deliver better returns for both UK plc and pension savers alike.”

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