This week saw the release of the long-awaited final Pension Investment Review report, which was shared by the government yesterday (29 May).

The final report confirmed the government will take a reserve power in the upcoming Pension Schemes Bill, expected to be introduced into parliament before the summer recess, to set binding asset allocation targets, as part of efforts to double the number of UK pension megafunds by 2030.

The plans have generated significant discussion across the industry, particularly following recent discussion around mandation in the wake of the Mansion House Accord.

However, Pensions Minister, Torsten Bell, told Pensions Age yesterday that he “doesn't anticipate” mandating pension fund investment in UK private markets, emphasising that such investments “need to be done in the right way”.

Some early investments have already been made, as Smart Pension announced plans this week to allocate up to 15 per cent of its flagship fund into private markets, signalling its support for the government’s agenda.

The final report also confirmed a March 2026 deadline for Local Government Pension Scheme (LGPS) asset pooling, with a backstop power to be included in the Pension Schemes Bill to safeguard the interests of LGPS members and local taxpayers.

In addition to this, London CIV has become the first LGPS pool to declare its intention to work with the British Business Bank on the new British Growth Partnership, joining Aegon UK and NatWest Cushon, who announced their intention to collaborate last year.

However, the report stopped short of providing an update on phase two of the review, which is expected to focus on pension adequacy, with the Minister instead promising further updates “in due course”.

In addition to the final Pension Investment Review report, the government has shared its response to the consultation on options for defined benefit (DB) schemes, which is looking to lift restrictions on how DB scheme surpluses can be used.

Underlining the growing appetite for reform, research from Brightwell found that 93 per cent of UK businesses with closed DB schemes over £500m intend to access surpluses once the government amend the rules.

The response to the consultation on options for DB schemes also saw the government confirm that it is continuing to consider a consolidator for DB schemes run by the Pensions Protection Fund, which previously saw experts stress the need for any public consolidator’s terms to align with those of commercial superfunds to ensure a "fair and balanced" approach.

Although the final Pension Investment Review report, and the news surrounding it, was the biggest headline in this short week following the bank holiday, it wasn’t the only development from the government in the pensions sector

The government also released research revealing widespread scepticism around potential changes to pension salary sacrifice arrangements, with respondents expressing particular apprehension about removing national insurance and tax breaks linked to salary sacrifice.

As LCP partner Steve Webb noted HMRC commissioned this research specifically to gauge employer reactions to these possible changes, suggesting there is a “significant risk” that such cuts could feature in the upcoming Budget.

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