Reeves clearly thought she was going to make a really good chancellor but so far she’s been the reverse. She kicked off by unleashing the Winter Fuel Payment shambles, which was a brilliant way of reminding pensioners why they don’t vote Labour.
She followed that with a Budget that has hammered growth, jobs, confidence and share prices, and reignite inflation for good measure.
So when we hear that Reeves has big plans for our pensions, alarm bells inevitably start ringing.
There’s a germ of a good idea here. Unfortunately, it’s blended with a very worrying one.
Reeves is planning a Canadian-style overhaul of British local government pensions that she hopes will unlock £80billion worth of much-needed investment UK infrastructure and growth companies.
She’ll do this by merging 86 local government schemes into a “megafund” that will manage about £500billion by 2030.
Today, these schemes are managed by local government officials and councillors. She wants to consolidate them and bring the experts in.
There’s a solid argument in favour.
The big pension schemes have largely abandoned the UK, starving our economy of the funds it needs to grow.
In 1997, private sector pension funds invested half of the money they held in UK companies. Today, that’s plummeted to a meagre 4% as the scour the world for better returns.
This has starved UK companies of money they need to grow. No wonder the UK economy and stock market have trailed the US for years.
Former Tory chancellor Jeremy Hunt had a plan to sort this but Reeves has come up with a much bigger one. I can see why she’s tempted but there’s a problem.
This isn’t her money to play with.
Those pension funds are there for a simple reason: to provide a reliable retirement income to members, such as teachers and civil servants.
For Reeves to mandate how they do that is a risky step.
She has decided against actively forcing pension funds to invest in British firms, but will require each fund to specify a target for UK investments.
Today, trustees are free to invest wherever they think they will get the best returns. Wherever in the world that is. They won’t have that freedom if this plan goes ahead.
Local government pension schemes are special. In contrast to most public sector pensions, most are fully funded and largely solvent.
They’re not backstopped by the taxpayer. This makes it even more important to deliver good returns for members.
If Reeves is right, her megafunds will boost investment in UK companies and stem the flow of British firms to the US, which boasts far deeper pools of capital.
But what is she’s wrong? It won’t be the first time.
Pension scheme trustees have one job, to maximise pension members’ returns. That job isn’t to boost the UK economy, but now that’s what they’ll have to do.
And if their funds underperform as a result, members will be the ones to suffer.
As Tom Selby, director of public policy at AJ Bell puts it, Reeves is using “other people’s money to drive economic growth”.
Reeves messes with local government pension schemes at her peril. Or rather, members’ peril.
Given Labour’s dismal track record with our pensions (I’m looking at you Gordon Brown) pension scheme members will be rightly nervous.
It’s either a brilliant idea or dystopian nightmare, and we won’t discover which until long after Reeves has moved on. Oh, and her MP’s pension won’t be part of this experiment. Just saying.