The government will consult on further changes to the regulatory charge cap for pension schemes.
In his Autumn Budget today (October 27), Chancellor Rishi Sunak said this will be a way to encourage schemes to invest in the economy while protecting savers.
He said: “We will consult on further changes to the regulatory charge cap for pension schemes, unlocking institutional investment whilst protecting savers.
“It’s why we’re introducing a new £1.4bn global Britain investment fund, supporting transformative economic activity in our world-leading sectors like life sciences.”
This follows the March budget where the government said it was "taking steps to give the pensions industry more flexibility to unlock billions of pounds from pension funds into innovative new ventures".
During the same period, the Department for Work and Pensions opened a consultation into whether the charge cap prevents pension schemes from investing in a range of alternatives, such as venture capital, illiquids and growth assets.
Commenting on Sunak’s announcement today, Claire Trott, divisional director for retirement and holistic planning at St James's Place, said: “This is a positive for the largest funds out there but we wait to see the appetite for this kind of investment.”
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, welcomed the move.
She said: “While introduced to safeguard value for scheme members we know that cost is only one determinant of value.
"There will be appetite to invest in more illiquid assets, especially if it aligns with people’s values of a greener future and this would prove difficult with the charge cap in its current form.
"We await the full detail, but it will be interesting to see if this may also read across to charges on drawdown investment pathways.”
sonia.rach@ft.com
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