Team Blitz India
LONDON: Chancellor of the Exchequer Jeremy Hunt has announced pension fund reforms as a further step in the Government’s plan to boost British business and increase returns for savers. This includes requirements for Defined Contribution (DC) pension funds to publicly disclose their level of investment in the UK.
The Government’s auto enrolment rollout has driven a huge growth in the amount of investment entering UK pension funds, from less than £90 billion in 2012 to around £116 billion in 2022, according to HM Treasury.
However, the disclosure requirements for DC pension funds are inconsistent across the market and do not require a breakdown of UK investments, sometimes making it difficult for policymakers and savers to understand where this money is invested, added an official statement.
By ensuring pension funds publicly disclose where they invest and the returns they offer, it will make it possible for employers and savers to compare schemes and make informed choices.
The government is embarking on Value for Money (VFM) pension fund reforms to improve outcomes for savers and consolidate the DC pensions market, it said, adding that the reforms will ensure that pension managers are focused on securing good returns for savers.
“British pension funds appear to contribute less to the UK economy than international counterparts do as they invest less in our domestic businesses,” said Chancellor Hunt. Under the plans DC pension funds across the market by 2027 will disclose their levels of investment in British businesses, as well as their costs and net investment returns. Also, pension funds will be required to publicly compare their performance data against competitor schemes, including at least two schemes managing at least £10 billion in assets.
Further, schemes performing poorly for savers won’t be allowed to take on new business from employers, with The Pensions Regulator (TPR) and Financial Conduct Authority (FCA) having a full range of intervention powers. The plans are subject to a consultation by the Financial Conduct Authority and build on the Government’s Mansion House compact, which encouraged pension funds to invest at least 5 per cent of their assets in unlisted equity, the release added.
Last year, Chancellor Hunt had set out the Mansion House Compact, in which 10 DC pension funds, Aegon, Legal & General and Aviva, had voluntarily committed to investing at least 5 per cent, or about 50 billion pounds, in life science, fintech, biotech, clean tech and other types of high growth unlisted UK companies by 2030.
