Pension funds will be ordered to invest more money into UK assets if changes announced last week by The Chancellor don’t see an increase in money flowing into Britain.

Emma Reynolds, UK pensions minister, told the FT that while last week’s changes had avoided forcing pension funds to invest in British assets, such “mandation” would be considered if they don’t do enough.

“We’re not talking about it for now, but let’s see where we get to,” Reynolds said, in an interview with the newspaper.

“Investment in pensions is, as you know, very generously provided for in terms of tax relief,” she added.

Any “mandation” would be part of the second stage of a pensions investment review, Reynolds added.

Making bigger pension investment funds is a big part of the government’s plans both for institutions and individuals, she added.

Last week, Reeves said the government will make 86 councils pool their pension fund investments into eight pools by March 2026 with clear mandates about where to invest.

“We are going to be much, much more prescriptive as to what pooling means and how you pool and the assets that you have should be managed at pool level because that will drive better returns,” Reynolds said.

Private sector direct contribution workplace pension schemes also will be merged with a minimum £25 billion assets threshold for multi-employer schemes.

“The overall vision is fewer, bigger, better run. Pension schemes that can drive better deals, can bear down on costs and benefit from economies of scale.”

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