Another reform the chancellor says will be pro-growth is enabling UK companies to access the funds from their “defined benefit pension” pots, held on behalf of their workforces to fund their retirement.

Defined benefit pension schemes guarantee an annual pension payment to retired workers, based on their salary while they were in work.

Many of these defined benefit pension pots have moved into surplus in recent years due to the rise in interest rates since the pandemic, meaning their financial assets (their investments) are greater than their financial liabilities (what they have to pay out to pensioners).

The Treasury has said that approximately 75% of schemes are now in surplus and that the total surplus adds up to £160bn.

The chancellor wants to legislate to allow the firms to use these funds to invest, while keeping safeguards to protect and guarantee workers’ pension pay-outs.

Measuring the size of the surplus of defined benefit scheme depends on various complex assumptions about the scheme and its relationship to the employer.

The official Pension Regulator estimates that on one measurement the size in September 2024 was £207bn, but £137bn on a different measurement.

The Treasury’s estimate is roughly midway between the two.

If such sums were deployed that could, in theory, make a positive difference to overall UK business investment, which is regarded by economists as both a short term and a long term driver of GDP growth.

Total business investment in 2023, according to official data, was £258bn.

But the size of any boost from this pension reform would depend on companies being willing to invest their surpluses, which is subject to great uncertainty as many firms have been looking to offload their defined benefit pension schemes to insurance companies in recent years.