Pensions are not just a plaything for politicians, Rachel Reeves told

Royal London chief says the primary role of savers’ pots is to fund their retirement

Rachel Reeves has been warned against treating Britain’s £3 trillion pension pot primarily as a tool to deliver her growth targets, instead of a fund for savers’ retirement.
The Chancellor has been urged by Royal London, one of Britain’s biggest pension companies, to remember that the money’s main role is to support people in their old age.
Ms Reeves has made boosting economic growth a central mission for the Government, and is seeking to direct pension funds into areas that she considers most likely to drive up GDP.
Barry O’Dwyer, the chief executive of Royal London, said: “With an estimated £3 trillion invested in UK pensions, it is understandable pensions are viewed as being able to play a powerful role in supporting UK economic growth. 
“However, it is important to remember the primary role of pensions is to fund customers’ retirement.”  
Ms Reeves launched a review of the pension industry earlier this month to try and drive the vast pool of savings built up by retirees into “productive” areas of the UK to help the economy. 
The Chancellor, a former shadow pensions minister, has labelled her proposals to shake-up the pensions industry a “big bang of reforms to unlock growth, boost investment and deliver savings for pensioners”.
She recently met with the heads of large pension providers like M&G, Legal & General, Phoenix and Aviva to thrash out the issue. Royal London supports the review, despite Mr O’Dwyer’s note of caution.
Ms Reeves last week launched a review to consider whether the UK’s £360bn of local council pensions should be combined into one single fund. 
There are more than 80 individual taxpayer-backed pension funds across the UK and consolidating them into a single pot could be more cost effective.
Defined contribution (DC) pensions, the main type of workplace pension for millions, have boomed after the introduction of compulsory pensions known as auto-enrolment.
The value of DC schemes is expected to swell to around £800bn by 2030 and Ms Reeves’ review will explore ways to increase their investment into useful economic areas.
The Treasury said just a 0.1pc shift in putting DC money into so-called “productive assets” could deliver a £8bn investment boost. 
Mr O’Dwyer said: “The new Government has an opportunity to build on the success of automatic enrolment by creating a long-term plan that would have a positive impact on retirement outcomes while also generating investment to help finance growth.” 
Royal London’s operating profit rose 13pc to £144m for the half year ending June, boosted by a boost to its workplace pensions business. The business manages £169bn for people saving for retirement.
Sales rose by 4pc to £5bn after the workplace pension boost offset a decline in its business of buying old books of pension liabilities from corporate pension schemes.
Net inflows at its fund management business fell to £100m, down from a £3.2bn boost for the same period last year.