Rachel Reeves Credit: HM Treasury/Flickr
Chancellor Rachel Reeves has said she is “confident” the government will not need to use the power to mandate pension scheme investment.
In her Mansion House speech tonight (15 July), Reeves said while the Pension Schemes Bill – which had its second reading in parliament last week – reserves the power to mandate pension funds to invest productively in a wider range of assets, which sends a "clear signal that pension funds and this government are united in our determination to deliver higher returns for savers and more investment for the economy", she is "confident that I will not need to use that power".
She said this is because firms "see the urgency and importance of this as clearly as I do".
This has been evidenced in part through the Mansion House Accord – which is a voluntary agreement – where 17 pension providers committed to investing 10% in private assets with at least half in the UK.
Last year at Mansion House the government set out an overhaul of the UK pensions system which included proposals for the creation of defined contribution and Local Government Pension Scheme ‘megafunds', which were reaffirmed in the bill – which Reeves confirmed will be signed into law "in the next few months".
She said the move "will mean larger and more powerful pots of funding invested productively across the country".
Reeves added: "We have a duty to maximise the potential of people's pension savings."
During her Mansion House speech, there was a lack of mention of various areas that had been speculated on, including phase two of the pensions review, which is expected to focus on adequacy.
Elsewhere, Reeves outlined plans to introduce targeted support to overhaul the financial advice and guidance framework and help consumers make better financial decisions, with reforms due ahead of the new financial year.
She used her first Mansion House speech on 15 July to highlight that the current system of financial advice and guidance is "tangled" and is preventing people from accessing the right kind of help. In response, the government is working with the Financial Conduct Authority to introduce an advice category that aims to bridge the advice gap.
