UK public sector pension funds are not big enough to generate good returns for British savers, Chancellor Rachel Reeves has told the BBC. Her comments come as the government reveals plans to merge the UK's local government pension scheme, a group of funds which together manage £354bn in investments, into a handful of "pension megafunds".

Chancellor of the Exchequer Rachel Reeves said the UK will introduce legislation next year to pool £1.3 trillion ($1.7 trillion) of pension savings into a series of “megafunds,” as the new Labour government tries to deliver on its pledge to boost private investment and economic growth.

While her changes may constitute the biggest overhaul of the pensions sector in decades, some in the City say the truly radical option remains firmly in the back pocket.

Rachel Reeves will set out plans to create British ‘megafunds’ - Stefan Rousseau/PA Wire Rachel Reeves will tear up workplace pension rules as part of a broader shake-up that the Chancellor claims will unlock up to £80bn in investment. In her maiden ...

Chancellor Rachel Reeves plans to merged dozens of council pensions schemes into much larger schemes. Some experts have warned 'big isn't always beautiful'.

In her Mansion House speech tonight, the Chancellor will confirm she is pressing ahead with plans to merge pension schemes to create new 'megafunds' capable of investing in major infrastructure projects and emerging industries.