Industry disappointment as pensions missing from King's Speech

The King's Speech failed to make any mention of pensions today (7 November), dashing industry hopes that the government could be set to introduce a new Pension Schemes Bill to progress the Mansion House reforms.

Industry experts had suggested that the King's Speech could introduce a Pension Scheme Bill to build on the Mansion House reforms announced by Chancellor, Jeremy Hunt, earlier this year.

In particular, the Mansion House reforms include plans to “unlock” up to £75bn of additional investment from DC and Local Government Pension Schemes (LGPS), as well as plans to address small pots concerns and proposals to hand defined benefit (DB) scheme sponsors greater flexibility to access surpluses.

However, whilst a number of new bills were confirmed, the King's Speech omitted any mention of pensions, prompting concerns that many policies could be left in “limbo”, with the government severely limited as to what can be achieved this side of the General Election.

LCP head of pensions research, David Everett, stated “Unless there is mention of a Pensions Bill in the King’s Speech, it seems that the promised ‘decisions’ in the Autumn Statement about the Mansion House pensions proposals can be little more than a direction of travel up to and beyond the General Election.

“A new government will then have a big to do list and there will need to be new decisions made around which topics to press on with and which to jettison. No Pensions Bill means that many pension policies will remain in limbo or will potentially be delivered without regulatory teeth such as through interim guidance from The Pensions Regulator.”

These concerns were echoed by PensionBee director of public affairs, Becky O'Connor, who said: “The omission of the Pension Reform Bill in today’s King’s Speech implies that Chancellor Hunt’s Mansion House proposals might set the direction of travel, but lack a substantial commitment to how these changes will be made in reality.

"Following the upcoming general election, the incoming government will encounter a myriad of crucial decisions, where neglecting attention to pensions poses the danger of leaving pivotal reform issues unaddressed, perpetuating a stage of limbo in pension policies."

However, Aegon pensions director, Steven Cameron, said that while disappointing, other routes could be found to advance the Mansion House reforms.

He continued: “All eyes will now be on the Chancellor’s Autumn Statement. In July, the Chancellor set out his ambitions for defined contribution pension schemes to increase their investment in private equity, with a view to boosting the UK economy. The Government has been consulting on a raft of ideas to encourage such investment.

“The initiatives include a new value for money framework for defined contribution pensions which will shift the focus away from minimising costs to maximising value for members, including through seeking out new investment opportunities.

"Those schemes which can’t meet the new test will be expected to wind up and consolidate into a larger scheme, which is then more likely to invest in private assets. There are also plans for extending a new form of collective defined contribution pension which is likely to have longer investment time horizons, making private asset investments more likely.

"There have also been consultations on plans to solve the issues with multiple small deferred pension pots and to open up a wider range of ‘at retirement’ choices to members of trust-based schemes.”

“While there’s no Pensions Bill to take these forward, we believe they remain government priorities and await clarity on next steps. We encourage the government to prioritise those initiatives with the greatest potential to boost retirement outcomes of individual members.”

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