Chancellor Rachel Reeves is aiming to create "pension megafunds" by merging the UK's 86 council schemes - and hopes to use the funds to invest in energy infrastructure.
The planned move, deemed the "biggest pension reform in decades" is an attempt to boost economic growth and raise billions of pounds to be invested in fields such as energy, tech and public services.
The BBC reports Reeves said current UK public sector pension funds were not big enough to generate good returns for British savers.
But others argue the changes are not without risk.
Speaking ahead of her first speech as chancellor at the annual Mansion House gathering of investors in London, Reeves told the BBC she wants the UK's pension schemes to be more like those in Canada and Australia, where pensions of local government workers are pooled into a handful of funds which are able to make big investments around the world.
"They probably have the best pension funds anywhere in the world," Reeves said.
FTSE 100
The UK's flagship share index, the FTSE 100, was up 48 points at 8,023 shortly after opening this morning.
Brent crude oil futures were down 1.35%, trading at $71.58 a barrel.
Companies reporting today
Alibaba | Q2 Results |
Assura | Half Year Results |
Experian* | Half Year Results |
Land Securities Group | Half Year Results |