Pension pots could get £16,000 boost as experts tell Rachel Reeves to make changes

Labour's Rachel Reeves has been urged to use her new role to encourage better pension investments that could boost pension pots by £16,000 or much more.

Chris Ball, managing partner at Hoxton Capital Management, said Labour's plans to increase pension investments could deliver impressive returns.

He told Express.co.uk: "It sounds very much like there will be significant pension changes to accelerate investment in all things property and homegrown British business.

"Combining reduced business rates for specifically vetted homegrown companies that allow pension investments into them could be one way of helping those companies achieve higher returns that could be passed onto the pension holders by way of tax efficient dividends.

"Even if those adjustments lead to a one percent increase in the returns of pension funds each year, the difference could be staggering.

"For example, an £100,000 pension fund returning five percent a year for 10 years would result in over £16,000 more in ultimate fund value."

Mr Ball also pointed to Labour's housing plans, with hopes to build 1.5 million homes over the next Parliament, as a potential sector for increasing pension investments.

The wealth expert said: "Based on Rachel Reeves’ speech, it is clear that this Labour Government has set lofty housing targets so changing the pension rules to allow investments in residential housing if it is for building or developing new homes may be one route they choose to go down.

"Currently only commercial properties are permitted to be invested in. Another method could be to increase the amount of tax allowable contributions into pension funds in a given year, in excess of the current £60,000 annual allowance if these are being directly invested in areas that will boost the economy according to her speech, i.e. small businesses on high streets or new residential homes."

Although the new Labour Government will want to strike out with fresh pensions policies, some experts are predicting they could take forward ideas from the previous Conservative Government's Mansion House reforms.

Donald Fleming, pensions partner at RSM UK, said: "The Mansion House reforms included a wide range of proposals to increase returns for pensions savers – including through investment in 'high growth' UK companies - as well as seeking to incentivise companies to grow and list on the London market.

"In her first speech as Chancellor, Rachel Reeves has stressed the need for 'growth' in the economy, and in strikingly similar language to her predecessor, will turn her attention to the pensions system, to drive investment in homegrown businesses and deliver greater returns to pensions savers.

"So, it is likely that the new Government will continue with the Mansion House reforms and much of the detailed, technical, changes.

"Given the complexity of dealing with these matters, it is to be hoped that the new chancellor will consult with the pensions and finance sectors to make sure that they are properly integrated across the financial system."

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