The UK government has watered down plans to mandate direct pension funds should invest with a new amendment to its contentious Pension Schemes Bill.
The amendment, tabled today, clarified that the power to mandate where pension schemes invest will be tied to the targets in the existing Mansion House Accord – a voluntary agreement by 17 of the biggest of workplace pension providers to invest at least 10 per cent of defined contribution (DC) assets into private markets by 2030, with five per cent allocated to the UK.
The original Pension Schemes Bill draft included a reserve power allowing the government to mandate these targets if pension schemes did not meet them of their own, but it did not explicitly state that this would be capped at the targets in the Accord.
It comes after the House of Lords voted to scrap this power from the bill, with one amendment to remove the power from legislation winning 213 to 13 votes.
The government also said today it intended to block all of the peers’ amendments when MPs debate them on April 15.
Julian Mund, chief executive of Pensions UK, said of the amendment: “Pensions UK firmly supports the passage of the Pension Schemes Bill, which enacts a series of critical reforms in savers’ interests.
“The amendment to the reserve power which mandates DC pension schemes’ asset allocation addresses our most serious concern and brings the legislation in line with the Government’s stated intention of acting only as a backstop to the Mansion House Accord. We would like, in addition, to see the sunset clause brought forward to lessen the political risk attached to the power.
“These are changes that Pensions UK has consistently called for, should the reserve power remain in the Bill, and we are pleased that the Government is listening.”
