Savers won't benefit from Reeves's pension reforms, Labour's own research suggests
Unearthed government documents show that changes brought in by Pension Schemes Bill will provide just 'slightly greater expected returns', despite the Chancellor's promises to deliver 'bigger pots for savers.'
The Bill, which is set to become law next year, proposes giving regulators the ability to force defined contribution schemes to invest in private markets.
But in a best case scenario, this will only add £5,000 to an average pension pot after 30 years, Government forecasts show.
Experts have repeatedly warned that the Chancellor risks 'sacrificing' people's long-term retirement goals in pursuit of economic growth.
Meanwhile, Ms Reeves has claimed that the Bill is a 'game changer' that would deliver bigger returns.
Currently, the majority of defined contribution schemes are invested in public markets, such as government and corporate bonds or stocks and shares. The private market, such as start-ups and infrastructure projects, only makes up a small portion of pension fund portfolios.
But under Ms Reeves's changes, regulators could be given a reserve power to force schemes to invest in UK private markets.
Mike Ambery, of Standard Life, said he did not expect the reserve power to be used, but he questioned why it was added to the Bill in the first place when already positively being actioned.
Under the voluntary Mansion House Accord, 17 of the UK's largest defined contribution scheme providers pledged to invest at least 5pc of their assets in UK private markets by 2030.
Defined contribution pensions are schemes that savers pay in to to build up a pot of money over time.
Tom Selby, of AJ Bell, said: 'Pension schemes should fundamentally be investing to deliver the best possible returns for savers, regardless of where those assets are held.'
'There is a real danger in conflating the Government's increasingly desperate efforts to deliver economic growth with people's long-term retirement goals that the latter will be sacrificed in pursuit of the former.
'Ministers need to be straight with people about the risks inherent in this approach, rather than denying the uncertainty that exists and claiming this is somehow a guaranteed win-win for savers and the UK economy.'
The Chancellor has already faced criticism over other parts of the Bill, namely allowing defined benefit pension schemes to transfer surplus funds back into businesses.
Firms will be allowed to raid £160bn in defined benefit pension surpluses, loosening existing safeguards that protect pensions from riskier investments.
Around 8.8 million savers are members of a defined benefit pension scheme. They provide a guaranteed income for life, typically based on someone's final salary.
The majority of defined benefit schemes are now running at a surplus thanks to increased investment returns and higher interest rates.
Steve Webb, partner at pension consultants LCP, said: 'The Government's primary objective in changing the way pension funds are invested is to boost the UK economy rather than to boost individual pensions.
'The Government's own projections suggest that even after several decades of the new approach, the impact on individual pension pots is likely to be slight.
'Given that we clearly have an under-saving crisis in the UK, with millions set for a disappointing retirement, there needs to be much greater urgency around measures to get more money flowing into pension savings'.
The Department for Work and Pensions was contacted for comment.
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