Britain won't mandate pension funds to consolidate or invest in high-growth companies, but there must be change in the sector to give pension holders better returns, finance minister Jeremy Hunt said on Wednesday.

"I think we have got too many pension funds in this country, and I do want to see an industry," Hunt said, adding he wanted to see larger funds with confidence to invest in growth companies.

"I'm not thinking we should mandate how people do that. I want to give people options... but to make it clear that no change is not an option," Hunt said.

Hunt launched the "Mansion House Compact" in July to help channel pension fund cash into unlisted companies to boost growth. (Reporting by Huw Jones; Editing by Sachin Ravikumar)