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In his Mansion House speech on Monday 10 July, Chancellor Jeremy Hunt announced a package of pension reform.
His proposals are, he stated, guided by ‘three golden rules’:
So how does the government intend to go about this, and what might it mean for you?
Evolution - or revolution? The Mansion House proposals
Many of the proposals are DC-related:
Investment
Value for Money (VfM)
Consolidation
Retirement choices
A consultation was launched on using the LGPS to boost investment. The proposals include an ambition to double existing investment in private equity to 10% of assets, giving the potential to ‘unlock’ £25bn by 2030. It seeks views on accelerating the deadline for transferring all LGPS assets to pools to March 2025, and ‘setting a direction’ that pools exceed £50bn of assets. It also looks at ‘ensuring greater transparency’ on investments, the definition of investments, and investment consultancy services.
A publication Analysing the impact of private pension measures on member outcomes gives high-level impact estimates of the package of pensions announcements generally, and the planned Automatic Enrolment 2017 Review measures. It confirms that legislation currently progressing through Parliament will enable savers to save from age 18 (down from 22) and to receive contributions from the first pound they earn (rather than from £6,240). The Bill’s second reading in the Lords is due on 14 July 2023. A date for commencement is awaited.
Finally, there is a call for evidence on trustee skills, capability and culture. It looks ‘to deepen the evidence base around trustee capability and other barriers to trustees doing their job in a way which is effective and results in the best outcomes for savers.’ It considers the role of advice, and the possible need for accreditation and registration (without, however, mandating the use of professional trustees).
Of particular note is its focus on whether trustees ‘have the right knowledge and skills to consider investment in the full breadth of investment opportunities.’ Looking ‘to improve understanding of trustees’ fiduciary duties across both DB and DC schemes,’ it asks whether the way in which trustees are exercising or interpreting their duties, and a ‘risk averse culture’ could be holding schemes back ‘from exploring a broader range of investments’.
For more information on any of these developments and the impact on your scheme, please speak to your usual TLT Pensions team contact.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2023. Specific advice should be sought for specific cases. For more information see our terms & conditions.
Date published
12 July 2023
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