Reeves Pension Megafund Power Grab Panned by Industry – Guido Fawkes

Reeves Pension Megafund Power Grab Panned by Industry

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The Treasury has fired out a long press release on the launch of Reeves’ project to consolidate pension funds into megafunds for more domestic investment. The key points of which are:

• Multi-employer defined contributions schemes and Local Government Pension Scheme pools will have to manage at least £25 billion in assets by 2030.
• Smaller schemes worth over £10 billion unable to get there by 2030 can continue operating until 2035 so long as they submit a plan to reach £25 billion by that point.
• If that can’t be done schemes will be wound up or forced to consolidate.

The argument is that larger DC funds will invest more in UK equities. It is telling that Reeves has snuck a “reserve power” provision into her bill in order to allow Labour to specifically mandate investment in UK equities…

This threat of mandation is in line with Reeves’ parallel “Mansion House Accord” project – voluntary so far following briefings that legislation may be introduced to direct legislation. Labour is going further with these extra powers…

The industry is reacting badly:

• Broadstone’s head of policy David Brooks: “Savers will naturally be worried that their pension pots will not necessarily be invested with the best returns in mind but rather required to achieve specific allocations to Treasury-dictated geographies and sectors.”
• LCP partner and head of DC pensions Laura Myers: “Trustees draw on professional expertise to draw up an investment strategy which will best meet members’ needs, and the political priorities of the government of the day should never override this.”
• Fidelity International head of platform policy, James Carter: “We continue to believe that pension schemes must be allowed to direct pension assets in members’ best interests, without a mandatory requirement to invest in specific markets or assets.”

Trustees have to fulfil their fiduciary duty. Not that Reeves minds…