The omission of pensions from the King’s Speech took many by surprise but means all eyes will now turn to the chancellor’s Autumn Statement later this month.
The King’s Speech set out the government’s legislative priorities for the next 12 months, of which pensions were expected to be front-and-centre.
King Charles was predicted to confirm plans to drive higher levels of investment in private equity via pensions.
The speech was expected to mention the chancellor’s ‘Mansion House’ reform package which includes: an agreement between major workplace pension schemes to increase investments in private equity, exploring handing defined benefit (DB) scheme sponsors greater flexibility to access surpluses and proposals to encourage consolidation of small pension pots.
However, the speech did not mention any of those areas.
Becky O'Connor, director of public affairs at PensionBee, said: “The omission of the pension reform bill in today’s King’s Speech implies that c 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."
Meanwhile, Steven Cameron, pensions director at Aegon, said: “We’re disappointed that the government didn’t include a pensions bill in today’s King’s Speech.
“This is likely to be the last parliamentary session before the general election, and the current government has been consulting on a long list of initiatives.
“In the absence of a pensions bill, other routes will need to be found to advance these.”
The speech was expected to mention the reforms, including a package of measures focused on people’s workplace pensions with two central aims: to increase scale and encourage these schemes to invest more of members’ money in private equity.
The government has argued this could be a win-win for savers and UK Plc and that pension pots could potentially be boosted over the long-term by higher returns, while the country as a whole will benefit from capital being deployed into more productive areas.
Cameron said: “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.”
He explained that those schemes which cannot 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,” Cameron added.
“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.”
sonia.rach@ft.com
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