UK pensions minister prioritises ‘unlocking true potential’ of pension investment

Speaking at the Pensions and Lifetime Savings Association’s (PLSA) annual conference in Liverpool yesterday, pensions minister Emma Reynolds said her priority is “unlocking the true potential of our £2trn pensions industry”.

She said: “It’s a privilege to be the government’s minister responsible for one of the country’s most important industries. I want to realise its potential to help grow the economy by investing in UK productive assets and home-grown businesses of all sizes. And at the same time, I want to realise its potential to improve retirement outcomes, delivering a better deal for future pensioners.”

She noted that being the first joint pensions minister across the Treasury and the Department for Work & Pensions (DWP) she will ensure she delivers on both of these objectives and at the same time “break down the silos that have all too often prevented effective reform in the past”.

She pointed out that since the Labour government came into power at the beginning of the summer, it “wasted no time” in bringing forward a pension schemes bill to help funds invest in more productive assets, which she said could boost the pension pots of over 15 million savers highlighting measures such as consolidation of small pots, and introducing the Value for Money framework and requiring pension schemes to offer at-retirement products.

But Reynolds said that there was “much more we can and are doing” to deliver value for money for future pensioners and unlock “huge investment potential”.

“We want to extend the current offering on CDC pension schemes to more employers inspired by those countries already using these schemes. Looking to Canada and the Netherlands, we see funds from poor pension contributions are invested into a wider range of assets like infrastructure start-ups and private equity, which can boost returns and benefit the wider economy,” she explained.

Reynolds added that the DWP had received 200 responses to the first phase of the pensions review which looks at how the government can boost investment in UK growth, increase pension pots and tackle waste in the system.

She said that the government is currently working through the responses and will publish interim findings this autumn before publishing final recommendations next year.

“We want to move fast in realising the potential of pensions investment to kickstart growth and improve saver returns, separate from phase one, there will be a wider phase two,” she continued.

At the moment, Reynolds has declined to rule out potential mandating of how pension schemes should invest saying the government is “considering all the options at the moment” but wants it to be a “win-win for everybody”.

Elaborating on phase two of the UK pensions review, Reynolds said it will look at “further long-term steps we can take to improve pension outcomes, including the level of savings people need to achieve the retirement that they want”.

She acknowledged there is a “lot of interest” in phase two of the review and revealed that the industry “won’t have too long to wait” and will have “ample opportunity to contribute”.

Reynolds also confirmed the government remains “steadfast” in its commitment to deliver on pensions dashboards.

“While it remains too early to confirm a launch date for public use, the government wants to ensure that the public can realise the benefits of using a pensions dashboard at the earliest opportunity. And I want to stress the importance of the industry continuing to drive forward preparation for dashboards. We welcome that schemes are working on their data, and I would encourage you to make use of all available guidance, in particular, the updated standards released by the pensions dashboard programme,” she said.

Reynolds said the government is “determined” to press ahead with this “vital” innovation”. and concluded by saying that the industry has a “critical” role to play in innovating and improving the pensions landscape.

“Together, we face many challenges, but also great opportunities to unlock the true investment potential pensions delivering the growth the country needs and security in retirement that savers deserve, and I very much look forward to working with you on this agenda.”

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