JEFF PRESTRIDGE: Will Rachel Reeves' pensions shake-up be radical?

On paper, the Chancellor's overhaul of the country's fragmented pensions industry is welcome.

For too long, fussy financial regulators have made it difficult for pension funds to invest in riskier assets such as UK equities. This has starved many UK businesses of the capital necessary to grow.

It has also made the UK stock market less inviting for small investors who have responded by putting bigger chunks of their Isas and pensions in the tech-fuelled US market.

Rachel Reeves's reform centres on the creation of UK pension 'megafunds' with sufficient financial muscle to invest in the infrastructure projects necessary to get the wheels of the UK economy moving again.

First to go 'mega' will be 86 local authority pension schemes, which will be forced to merge into a 'handful' of £100million-plus funds. 

Their goal: to invest more into infrastructure assets and local public services. Many work-placed pension funds will also be required to merge.

Transforming? Potentially, but Ms Reeves' revolution will not happen overnight – legislation is required and then the messy process of merging funds will need to take place.

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There is also precious little detail on what requirements – if any – will be put on pension funds to invest in UK assets.

Ros Altmann, a pensions expert, is underwhelmed. She says that, given at least 25 per cent of each payment into a pension scheme comes from taxpayers, there is a strong case for funds to be required to have a quarter of their assets in the UK.

This, she says, would boost demand for UK assets and should increase the value of investors' pensions – and provide capital to UK businesses.

Ms Reeves' pension reforms, billed as 'radical', could turn out to be a damp squib.