Make no mistake. Rachel Reeves’ maiden Budget was an assault on working people. The chancellor may not have directly hit people’s pay packets with an increase in income tax, national insurance or VAT, but families will see their living standards rise more slowly as a result. Businesses – the lifeblood of our economy – will invest less and charge consumers more.

I’ll leave it there – for now. Enough has already been written about the Budget’s flaws and even though I believe it will be damaging, it does nobody any good to talk down the economy. There are clear opportunities for the chancellor to go for growth, but it will take time and involve bold choices that are not in the Labour Party’s DNA.

Take pensions. The UK, with a population of just under 70 million, has the third largest market in the world, with roughly £2tn saved. However, the pensions universe has become fragmented and risk-averse and, as a result, the UK doesn’t have a single pension fund in the global top 30 in terms of assets under management (AUM).

The Universities Superannuation Scheme, the UK’s largest private pension fund, has AUM of just under £77.9bn. Canada’s Ontario Teachers’ Pension Plan has more than double this. Over-regulation after the death of media tycoon Robert Maxwell has inflicted lasting damage. Funds lack firepower because they are too small and are bound by too many rules.

The winding-down of final-salary pension schemes means many are not invested for growth. This is not a call to mandate investment. That would be foolish. But companies have come to view their pension schemes as a burden rather than an opportunity, and savers are losing out.

According to the consultancy Willis Towers Watson, the UK has 58 per cent of its pension fund money invested in safe-as-houses bonds, compared with 26 per cent in shares. We know the latter provide higher returns in the long term, but decades of regulatory change and demographic reality have pushed funds to de-risk.

By contrast, Australia’s pension funds invest half their money in shares. The numbers are also more evenly split in countries such as Canada. Those investment choices have consequences. British pension funds have seen average annual returns of just 0.2 per cent in the 10 years to 2023, compared with 3.4 per cent a year in Australia and 2 per cent in Canada.

Some of that money has been invested in the UK bond market, helping to keep UK borrowing costs low. But investment in UK stocks has tailed off sharply in the past decade as final-salary pensions schemes become a thing of the past in the private sector. This has led the sector to de-risk further.

Much more can be done to harness this multitrillion-pound industry to drive further investment into the economy and boost returns through sensible regulation that recognises long-term investment in productive assets.

The chancellor believes big is beautiful and wants to drive a new wave of consolidation in the sector. She has stated how she wants to go down the Canadian route, where the pension system is characterised by huge, consolidated schemes that are cheaper to run.

“I want British schemes to learn lessons from the Canadian model and fire up the UK economy, which would deliver better returns for savers and unlock billions of pounds of investment,” she said recently.

It’s all good clumping more of the 25,000-or-so workplace pensions together, but the rules of engagement must also change. Currently, pensions are regulated by both the Financial Conduct Authority and The Pensions Regulator. Two regulators, one system. It makes no sense to carry on this way. Sir Keir Starmer has talked about removing the burden of regulation. It would be a good start to see more pension schemes playing by the same rules.

As a wider point, there is too much regulation pulling companies in different directions. Analysis by the Centre for Policy Studies of National Audit Office data in 2019 found there are around 90 regulatory bodies in the UK that spend £6bn of public money every year.

Sir Keir has said Labour will create a Regulatory Innovation Office to improve accountability and promote innovation. Call me a cynic but that sounds like a bit of an oxymoron to me. Can you really regulate innovation? The government must work on fine-tuning the old before it creates more arms-length bodies to ensure decisions are somebody else’s problem.

There is also the elephant in the room. Britons are just not saving enough. In an era when younger people are being forced to wait longer to get on the housing ladder, or increasingly not getting on it at all, more people face the prospect of renting into retirement or relying on the state to help make ends meet because they do not have adequate retirement savings.

In the coming years, the government has promised it will look more closely at whether we are saving enough. The clear answer is we are not. Nest, the biggest workplace provider, noted in a 2022 report that the average median pension pot was just £800 among all its members and £2,210 for those still paying in. Two-fifths of savers have a pension pot of £500 or less and just one in seven has one worth more than £5,000.

Given that the Pension and Lifetime Savings Association believes a single person needs £31,300 a year in retirement or £43,100 for a couple, being financially secure in old age looks out of reach for many.

We will all need to contribute more, perhaps at similar levels as Australia, where contributions are due to rise to 12 per cent next year. The government will need to tread carefully though. Business is already dealing with a raft of extra costs. The last thing it needs is more employers doing the bare minimum on pensions when it should be one of the areas they are investing in. After all, if we don’t save enough for the future, we will all pay.

Read more @businessleader