Gervais Williams, head of equities at Premier Miton, said combining smaller schemes into megafunds was a “mistake”.

“They’ve always been able to invest in big companies, but also small companies. These megafunds, by implication, they’ll invest in mega companies and many of the smaller companies will be, unfortunately, less significant in them going forward.”

Some have argued the changes could bring risks for pension savers.

“Conflating a government goal of driving investment in the UK and people’s retirement outcomes brings a danger because the risks are all taken with members’ money,” said Tom Selby at investment platform AJ Bell.

He said the current system encourages trustees to deliver the best outcome for members rather than focus on UK-wide economic growth, which might mean investing outside the UK.

Others question whether there are enough big UK projects to invest in.

“Large funds need substantial, reliable projects to generate returns, but the market may struggle to offer enough of these opportunities, especially in the infrastructure sector,” said Jon Greer, head of retirement policy at wealth manager Quilter.

Shadow chancellor Mel Stride said the Conservatives “will be looking closely at the detail of what Rachel Reeves sets out – particularly regarding the mandating of where investments are to be made”.

Former chancellor Jeremy Hunt said there was “much to welcome”, external in Reeves’ plans, adding it was broadly the “same strategy and approach” he had announced in his Mansion House reforms last year.