"The Local Government Pension Schemes are fully underwritten by taxpayers and just trying to unlock £25bn by 2030 also seems relatively unambitious.
"These pension funds could be harnessed to boost local housing projects across the country, to improve business conditions and infrastructure across the regions and still deliver good returns over time from a carefully constructed portfolio of assets spread across sectors and regions."
Finally, she said, encouraging more UK pension funds to invest in domestic quoted equity markets could help reverse the decline in quoted UK equity market attractiveness.
"Plenty of work still to do, let’s hope this is just the start of making better use of UK pension assets, both from defined contribution and defined benefit funds, to boost all our futures."
But others have pointed to the potential risks in channelling pension money into high risk assets.
Tom Selby, head of retirement policy at AJ Bell, said: "While this desire to corral pension money into the UK economy is understandable, there is a danger hard-working savers will simply be forgotten about in all of this. It is also important the benefits and potential risks of these reforms are carefully explained to savers.
"Claims from the chancellor last night that the average DC pension saver will see their retirement pot increased by 12 per cent, or £1,000 a year, for example, as a result of greater levels of allocation to illiquid, high-risk investments are deeply concerning.
"It is, of course, possible that these assets will deliver greater returns than existing investments – but to suggest this with such certainty without mentioning the risks involved is dangerous."
He added: "As these reforms move from consultation to reality, it is vital the structures that exist in the UK to protect savers, including regulators and trustees, remain entirely focused on the needs of savers, rather than the political goals of the party in power."
The government is to launch a call for evidence this week on the role of the Pension Protection Fund and the part DB schemes play in productive investment.
It will also look at the culture of investment decisions and pension trustees’ fiduciary duty across DC and DB pension schemes, through a call for evidence launched jointly between the Treasury and the Department for Work and Pensions.
carmen.reichman@ft.com
