However, the Goldman Sachs report warned this does not mean British shares should expect a boost in the coming years.

Analyst Sharon Bell said: “Even if DC funds – which tend to allocate much more to equity – become the dominant part of the pension pie, we might still find a lack of [demand] for domestic stocks from this source.

“Incentives to capture these assets for UK investment along with a compelling equity-market growth story would be needed to change this. Of course, this is somewhat circular; there is a need for domestic investors/ownership in order to deepen the capital market and encourage new companies to list.”

The Government is trying to address this with a range of new policies, including a British ISA that allows savers a bigger tax-free pot if they invest in UK-listed shares.

Chancellor Jeremy Hunt said the ISA’s extra £5,000 allowance will “ensure that British savers can benefit from the growth of the most promising UK businesses as well as supporting them with the capital to help them expand”.

A HM Treasury spokesman said: “At Spring Budget, the Chancellor announced plans that build on current reforms to strengthen the UK’s capital markets, increase liquidity, boost savings, and facilitate investment in UK companies – and said that he will consider what further action should be taken if pension investment does not take a positive trajectory towards international best practice.  

“Already our Mansion House and Edinburgh reforms are delivering a plan for long-term growth of the economy, including unlocking up to £75bn from pension funds and a compact encouraging defined contribution funds to reach 5pc investment in unlisted UK equities.”