Britain's Pensions Regulator said on Thursday that it welcomed government reforms to create larger pension schemes, which would enable them to invest more effectively in the UK economy.

The UK government has unveiled a plan for a comprehensive overhaul of the pension sector, aiming to create 'megafunds' through consolidation, which could unlock significant investment in domestic infrastructure, projects, and new businesses.

British Treasury chief Rachel Reeves is set to announce plans later Thursday to merge dozens of pension funds with the aim of unlocking tens of billions of pounds for investment and boosting the U.K.’

Chancellor of the Exchequer Rachel Reeves said the UK will introduce legislation next year to pool £1.3 trillion ($1.7 trillion) of pension savings into a series of “megafunds,” as the new Labour government tries to deliver on its pledge to boost private investment and economic growth.

Chancellor Rachel Reeves wants to copy the way Canada and Australia group their pension funds together in a bid to increase investment. The government believes this could bring in an extra £80bn of funding.

British Chancellor of the Exchequer Rachel Reeves said on Thursday the government planned to merge dozens of pension funds with the aim of unlocking tens of billions of pounds for investment and boosting the UK's subpar economic growth.