UK Plans to Double Pension Megafunds, Channeling £50B Into Domestic Investments

The UK government has unveiled plans to double the number of pension megafunds managing over £25 billion by 2030. This consolidation strategy aims to unlock £50 billion for domestic infrastructure, housing, and high-growth businesses—reversing decades of declining local investment.

Projections suggest average earners could see £6,000 pension boosts from fund consolidation alone, with additional gains expected through forthcoming Pension Schemes Bill reforms. The changes mandate all multi-employer Defined Contribution schemes and Local Government Pension pools to operate at megafund scale.

Drawing lessons from Australian and Canadian models, officials believe larger fund sizes will enable participation in transformative projects while potentially delivering superior returns. The initiative comes alongside voluntary commitments from pension funds to allocate 5% of assets to UK investments.