The chancellor has confirmed she is considering plans to consolidate local government pension schemes and use their £360bn of resources to invest in the economy.

Rachel Reeves said she was interested in following the example of Canada, where pension funds are used to invest heavily in infrastructure projects to help drive growth.

It comes after Sky News revealed that the chancellor would be meeting with a group of Canadian retirement funds in Toronto during a three-day trip to North America this week.

Currently, local government pensions in England and Wales are fragmented into 86 individual funds, across about six million members.

Ms Reeves said: “The size of Canadian pension schemes means they can invest far more in productive assets like vital infrastructure than ours do.

“I want British schemes to learn lessons from the Canadian model and fire up the UK economy, which would deliver better returns for savers and unlock billions of pounds of investment.

“We’re already beginning to see schemes announce plans to invest. That’s a vote of confidence in our work to fix the foundations of the economy, rebuild Britain and make every part of our country better off.”

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Ms Reeves previously announced a review into the pensions sector and the push to drive economic growth was also a key message of the King’s Speech.

The chancellor is expected to set out further details of her pension plans in her first Mansion House address.

Investment firms including Legal & General, Aviva and Phoenix have welcomed the industry review, which was launched in July.