PensionBee comments on the government's rejection of Lords amendments to the Pension Schemes Bill.

Lisa Picardo, Chief Business Officer UK of PensionBee, commented:

"The Pension Schemes Bill contains some genuinely welcome measures, but the controversial mandation clause that hands the Government power to interfere in asset allocation of DC master trusts and certain group personal pensions introduces a new lever inside the retirement system that should be fully insulated from political decision-making - given consumer savings are at stake. So it's disappointing that the Commons has chosen to override the House of Lords' judgment on this, as well as bypassing overwhelming industry opposition to this reserve power.

“As a concession, the Government has narrowed this power to align with the Mansion House Accord - capping required investment to no more than 10% in “qualifying assets” such as private equity and private debt, and 5% in UK assets. But even with limits, it still represents the crossing of a previously well-defined line. 

“With power comes great responsibility - but this mandation clause creates asymmetry between who wields the power, and who takes responsibility. Pension scheme trustees have a clear legal duty to act in the best interests of their members, and investment decisions must be driven by long-term value, transparency and suitability, not political pressure. 

“Ultimately it’s consumers that will have to bear the consequences if the current Government’s instinct on returns from private market assets does not turn out to be correct over time. Compelling schemes to allocate capital into specific assets, even within limits, injects a new risk for savers, that may ultimately undermine consumer retirement outcomes. 

"Our research shows that a third of British savers believe schemes should only be obliged to invest in UK assets if it leads to proven performance gains. If private markets and UK assets genuinely deliver strong returns, they will attract pension investment without the need for compulsion. The Government should be more focused on building the right conditions for healthier capital markets, and greater transparency in valuation and reporting on private asset classes.”

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