The prominence of pensions in King Charles's first King’s Speech, which has been set for November 7, will test the government's commitment to its pension reforms as it looks to take the dwindling number of opportunities to implement its agenda before a general election.
The state opening of Parliament marks the formal start of the parliamentary year and the monarch's speech sets out the government's agenda for the coming session, outlining proposed policies and legislation.
A general election must be held by January 28, 2025 but it is widely expected to take place next year. Some have speculated it could be held as early as May 2024, which would make this King's Speech the final opportunity for the government to set out its agenda.
Steve Webb, partner at consultants LCP and former pensions minister, said the Department for Work and Pensions would have “a shopping list of items” it would like to see implemented so will be pressing for a ‘slot’ in the final year before the general election.
Webb said: “This includes many of the items published alongside the chancellor’s Mansion House speech, such as consolidating small pension pots and driving consolidation of DC pension schemes.”
But he said a big question would be whether pensions were regarded as enough of a priority at this point in the election cycle to be prioritised over other issues which might be of more party political advantage.
Webb added: “Many of the ideas for making more productive use of DB pension funds would require legislation, and the speech on November 7, plus the Autumn Statement expected later that month, will give us a clear indication of how committed the government is to that policy area.”
In his Mansion House speech earlier this month, Jeremy Hunt said some of the UK’s largest defined contribution pension schemes had agreed to commit 5 per cent of their default funds to unlisted equities by 2030.
The group represents two-thirds of the UK’s DC pensions market, and the agreement could amass up to £50bn in investment into high growth companies, if the rest of the market follows - currently they invest less than 1 per cent in unlisted companies.
Hunt said his aim was to enable the UK’s financial services sector to increase returns for pensioners, improve outcomes for investors and unlock capital for UK growth businesses.
A raft of pension policy documents were then published alongside this with one in which the DWP announced plans to tackle the small pots issue through consolidation rather than through the 'pot follows member' approach.
Tom Selby, head of retirement policy at AJ Bell, said: “There are loads of other pensions things in the works, including the Mansion House reforms, but they’re at consultation stage and so aren’t likely to feature - although it is possible the King will nod to them even though there isn’t legislation yet.”
He said the King’s Speech should confirm the Finance Bill which will contain legislation, so the government urgently needs to clarify how the new pensions death benefits regime will work to give certainty to savers.
Earlier this week, LCP stated that a government consultation, which was published as part of a bundle of tax consultations on July 18, could result in ordinary taxpayers having to pay income tax where they inherit an untouched pension pot.
This would represent a change from the current pension landscape as, since 2015, it has been possible to inherit an untouched pension pot free of income tax, where the person who died was under the age of 75.
Another pension policy which has been in the news recently in the pension dashboard initiative, which has faced delays.
But Selby said while pensions dashboards were still supposed to be happening it would not be until after the election, so there is “no obvious reason they’d get a mention”.
amy.austin@ft.com
