A new review of the UK pension system aims "to boost investment, increase pension pots and tackle waste in the pensions system". As promised in their manifesto, on July 20, 2024, Rachel Reeves, the new Chancellor of the Exchequer, announced the “big bang on growth” to boost investment and savings. The review is to be led by the new joint Treasury and Department for Work and Pensions Minister, Emma Reynolds MP. 

The first phase of the review will focus on investment measures to be taken forward in the new Pensions Bill and will report “in the next few months”. The next stage is due to start later this year and will consider further steps to improve pension outcomes, including assessing retirement adequacy, and increasing investment in UK markets. The review will also look at how to unlock the investment potential of the £360bn Local Government Pension Scheme and how to tackle the £2bn spent on fees.

The chancellor and the pensions minister chaired a roundtable with the pensions industry on July 22, 2024, as part of their plan to start intensive industry engagement for the review.

Comment

The pensions industry has generally welcomed the swift news of the review and the fact that it appears to be an early priority for the new government. There is potential for faster implementation of measures to promote “productive” use of pension scheme funds and it is likely to lead to significant pensions legislative changes in the near future. However, there is a fine balance to be struck. Investment in productive assets in the UK could provide attractive returns for pension savers but mandating schemes’ investment in potentially sub-optimal assets, would not help deliver positive outcomes for savers. Trustees will also need to be adequately trained in the skills required to run schemes against complex investment backdrops. 



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