An agreement between nine pension providers, committing them to allocating 5% of assets in default funds (the ones used by the majority of savers) to unlisted equities, by 2030
A consultation on setting an ambition to double investments in private equity to 10% for Local Government Pension Schemes
Plans to introduce a permanent ‘superfund’ regime to provide employers with defined benefit schemes and their trustees with ‘a new way of managing Defined Benefit liabilities’
A call for evidence (to launch tomorrow, Tuesday July 11), on the possible role of the Pension Protection Fund and Defined Benefit schemes in productive investment
Plans for a new trading place that allows private companies to access public markets from time to time
A new ‘Value for Money’ framework, which will make clear that investment decisions by pension firms should be based on overall long-term returns, not just costs
The establishment of new Collective Defined Contribution funds, which can invest pooled assets
Call for evidence to explore how pension trustees can ‘improve their skills, overcome cultural barriers and realise the best outcomes for their pension schemes’.
Becky O’Connor, Director of Public Affairs at PensionBee, commented: “As far as generating higher returns for pension savers, the Chancellor’s reforms are a shot in the dark.
“The Government suggests that the approach will lead to an ‘everyone’s a winner’ scenario, in which retirees get bigger pension pots and innovative UK companies get the capital they need to grow. But there are no guarantees this win-win result will play out.
“While riskier, early stage investments could generate growth and higher pension pots over the long term, there is also a chance that some of these investments may perform badly. Earlier stage businesses are generally riskier and many of them could fail. This is why such opportunities are usually confined to private equity, venture capital and alternative investors, who can stomach large losses.
“If investment losses occur, pension savers would not get the higher retirement income the Government is suggesting they will have as a result of these reforms. They could even end up with less, although the target 5% of assets suggested should mean that no one’s pension is decimated, should the worst happen and the investments fail.
“As the benefits to all pension savers are uncertain and many of the investments could be risky, we believe that the approach of making involvement voluntary for pension funds, rather than mandating a percentage of assets, is the right one.
“It’s good to see further consultations on the role of private defined benefit schemes and Local Government Pension Schemes in investing in the UK. As these schemes offer guaranteed retirement income to members, there is greater scope to use these funds for UK investment, without increasing risk of loss to workers in them.
“The potential for a new option for private companies to tap into public markets is an intriguing suggestion and we look forward to finding out more about how the Government anticipates this would work in practice. Public markets are highly regulated in order to offer as much protection as possible to investors. This reform looks like a way to circumnavigate the requirements that fall to listed companies to look after their shareholders. There would have to be a strict set of rules around this.”
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