Government plans pension reform to boost growth

The government is to ease restrictions on how some pension schemes are managed, as part of efforts to boost economic growth.

The Treasury said defined benefit pension schemes have a total surplus of £160bn, but under current rules much of the money is trapped and cannot be invested in the wider economy.

The government has made boosting growth its main priority in order to boost living standards, but recent figures indicate the economy is struggling to expand.

The prime minister and chancellor will meet bosses of firms including Tesco, BT and Unilever as they attempt to attract more investment to the UK.

The meeting comes ahead of a speech by Chancellor Rachel Reeves on Wednesday where she is expected to focus on measures to boost growth amid speculation the government will back a third runway at Heathrow Airport.

On Monday, the chancellor told Labour MPs there were "no easy routes" to economic growth. She added ministers must start saying "yes" to new projects and go "further and faster" to boost the economy.

The consultation on pensions reform hopes to unlock billions of pounds within certain defined benefit schemes for alternative use in the economy, the pension schemes or the company.

Defined benefit pensions, sometimes known as a final salary scheme, are directly linked to a worker's salary and length of service.

Three-quarters of the funds that pay out these pensions are in surplus - which means they effectively have more money in them than needed to meet those pension payments.

Some pensions experts have warned there are risks around redeploying such funds, but The Pensions Regulator (TPR) has expressed its support for the government's plans.

"Where schemes are fully funded and there are protections in place for members, we support efforts to help trustees and employers consider how to safely release surplus if it can improve member benefits or unlock investment in the wider economy," said Nausicaa Delfas, chief executive of TPR.