Following Labour’s landslide election win at the beginning of the month, the new UK government appointed Liz Kendall as secretary of state at the Department for Work and Pensions (DWP) and Emma Reynolds as new pensions minister.
Reynolds has also been appointed as parliamentary secretary at both the Treasury and DWP, sparking hopes for a joined-up pensions policy approach, as many areas of pensions policy are typically split between the DWP and Treasury.
The pensions industry was quick to highlight a number of priorities for the new minister, including the extension of automatic enrolment, reforming the tax regime and legislation to allow the creation of multi-employer collective defined contribution (CDC) pension schemes.
In the King’s Speech marking the State Opening of Parliament the new government announced a new Pensions Bill to legislate several key areas of pensions policy, which included consolidation of defined contribution (DC) individual deferred small pension pots, ensuring all members are saving into pension schemes delivering value through the Value for Money framework.
Measures in the bill also include requiring pension schemes to offer retirement products, so that people have a pension and not just a saving pot when they stop working, and consolidating the defined benefit (DB) market through commercial superfunds.
Shortly after the introduction of the new Pensions Bill, the UK’s new chancellor of the exchequer, Rachel Reeves announced a pensions review as part of the new government’s mission to “boost growth and make every part of Britain better off”.
As part of the pensions review, Labour plans to unlock “billions of pounds” of investment from DC schemes and boost pension pots in DC schemes by over £11,000.
The review also aims to unlock the investment potential of the £360bn Local Government Pensions Scheme (LGPS), as well as determine how to tackle the £2bn that is being spent on fees.
This is a first phase of reviewing the pensions landscape and will be led by Reynolds. The second phase is due to start later in the year and will consider further steps to improve pension outcomes and increase investment in UK markets, including assessing retirement adequacy.
DB funding code
The Pensions Regulator’s (TPR) Funding Code has been laid in parliament this week after being delayed by elections earlier in the month.
The new code sets out to trustees, sponsoring employers and advisers TPR’s guidance and expectations on how to comply with the Funding and Investment Strategy requirements.
The code encourages good long-term planning and risk management behaviours and includes guidance on how trustees can set funding plans in line with the support their sponsors can provide and how maturing schemes can move to a point of low dependency on their sponsor.
New entry to bulk-annuity market
This month also saw Brookfield apply to establish an insurance company in the UK as it looks to enter the UK pensions insurance market.
Brookfield’s plan to enter the UK bulk annuity market follows a recent announcement by Royal London and Utmost, bringing the market to 11 participants and, according to Charlie Finch, partner at LCP, demonstrates the vibrancy of the UK bulk-annuity market.
The entry signifies a “second great wave of new entrants” to this market, according to commentators, many of which are aware of a number of other new entrants at varying stages of readiness.
FCA listing regime
The investment industry has expressed its disappointment as the Financial Conduct Authority (FCA) published its final version of UK listing rules, with officials saying their concerns over shareholder protection had not been heard.
Investors have repeatedly expressed concerns over the listing rules throughout the consultation process. The new changes introduce dual-class share structures which, according to commentators, “create entrenched power in the hands of a small number of investors, disproportionate to their ownership stake”.
Items to note:
- The IPE Conference & Awards 2024 will take place 2-3 December 2024 at the Cubex Centre and Žofín Palace in Prague. Sign up now!
Pamela Kokoszka
UK Correspondent
This news briefing was published earlier in the week. If you would like to receive it regularly, on your ‘IPE profile’, go to ‘My Newsletters‘ and select any from the list.
No comments yet