Labour proposes to impose mergers on small UK pension schemes A Labour government would require trustees to impose mergers on small pension funds which fail to deliver "good value" to their members under proposals from Liam Byrne, shadow welfare secretary. The radical plan, inspired by the "Cooper Review" of pension schemes in Australia, would mean that trustees would have to examine their schemes every year. They would have to judge whether they had sufficient scale and "investigate whether merger would be in the interests of their members." Mr Byrne would simultaneously empower regulators to mandate small schemes to merge where it is appropriate and to the benefit of members. The pensions industry has been criticised for its opaque structures and a lack of transparency over fees and charges. Gregg McClymont, shadow pensions minister, said there was a broad problem of lack of scale across the industry, given that Britain had more than 6,000 defined benefit schemes, 46,000 trust-based defined contribution schemes and 134,000 group personal pension schemes. "Scale matters, and there are just too many pension schemes," he said. Scale matters with investments. With more money you can take more risk because you can hedge it, but larger schemes also have the muscle to get a good deal from the investment industry. Mr Byrne will make his comments in a speech to the Birmingham Chamber of Commerce on Friday in which he will also criticise the coalition's implementation of flat rate pensions. The government regards its reforms, which will guarantee a pension of £144 a week in today's money, as one of its most unambiguous achievements. Ministers argue it will establish a firm platform from which people can save for retirement. But an analysis by the Institute for Fiscal Studies cast doubt on some of the claimed benefits of the shake-up. The IFS said: "These proposals imply a cut in pension entitlements for most people in the long run." While Labour supports the concept of a "single tier" retirement benefit, it is critical of the way that the changes will hit 700,000 "working women," offering only a "second class pension." "On average, employees will see their state pension reduced compared to the current system," Mr Byrne will say. Without creating private pensions people can trust . . . this bill is only half a reform.