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The Chancellor of the Exchequer hopes to boost pension pots by £11,000 and unlock billions more in investments with a review of retirement savings.
Pension schemes are expected to manage around £800bn by 2030, and the review will look at how they can be encouraged to invest in productive assets such as infrastructure.
As well as supporting the Government's aim of boosting economic growth, the Treasury said this would also ensure better returns for savers, increasing the average pension pot by more than £11,000.
The announcement follows the inclusion of a pension schemes bill in the King's speech on Wednesday, to help savers by introducing automatic consolidation of small pension funds and a value-for-money framework to improve governance.
Rachel Reeves said: “Despite a very challenging legacy, this new Government is moving forward with the task of delivering on our mandate to grow the economy so we can improve the situation of every part of our country.
“The review we are announcing is the latest in a series of reforms to unlock growth, stimulate investment and generate savings for retirees.
“There is no time to waste. That is why I am determined to fix the foundations of our economy so that we can rebuild Britain and improve people’s lives.”
The review will be led by new Pensions Minister Emma Reynolds, the first to work jointly with the Treasury and the Department for Work and Pensions.
Ms Reeves and Ms Reynolds will chair a meeting with the pensions industry on Monday to discuss the review, before the Chancellor chairs the first ever 'Growth Mission Board' on Tuesday focused on the Government's mission to secure the highest sustained growth in the G7.
Other measures being considered by the Government include further consolidation of the Local Government Pension Scheme (LGPS) for England and Wales, which is currently split into 87 trusts and pays £2bn a year in fees alone.
Ms Reynolds said: “Over the coming months, the review will focus on identifying further actions to boost investment that could be undertaken in the Pension Schemes Bill before exploring the longer-term challenges to ensuring our pension system is fit for the future.
“There is a lot of untapped potential in our pensions markets, with an industry worth around £2 trillion.
“The measures we have already set out in our Pension Plans Bill will help drive greater investment and better treatment for our future pensioners.”
The announcement of the review has been welcomed by the pension sector.
Andrea Rossi, chief executive of investment firm M&G, said the review was “much needed”, adding: “Consolidation, combined with the role of advice, has huge potential to align the interests of savers with the UK's growth ambition.
“We look forward to supporting the Government in this historic review.”
Barclays chief executive CS Venkatakrishnan said: “Pension reforms are critical to unlocking institutional investment in growth stocks and, together with a streamlining of listing requirements, will provide a significant boost to UK capital markets and growth.”
The previous government also targeted pension schemes as a potential way to unlock investment in British companies and infrastructure schemes, with then-Chancellor Jeremy Hunt announcing a raft of value-for-money reforms in March.
In an article published in the Mail on Sunday, Ms Reeves said the Conservatives had “promised action” to reform pensions but “failed to deliver” during her 14 years in office.
She said: “Not only is the current system not generating the retirement savings it should, it is also not doing what it should to support some of our great British businesses.”
The Chancellor added: “Where they have failed, I will act.”
