On September 23, 2022, the Chancellor Kwasi Kwarteng delivered his mini Budget.
The
Growth Plan 2022 outlines proposals to reform the pensions regulatory charge cap so that it will no longer apply to “well-designed performance fees” in an effort to accelerate pension investments into UK businesses and innovative assets. This was generally welcomed as a pragmatic step towards making investment in illiquid assets, such as infrastructure supporting growth and the transition to net zero, a more attractive option for DC schemes.
The Government plans to introduce a new Long-Term Investment for Technology and Science (LIFTS) competition, which will provide up to £500 million to support new funds designed to catalyse investment from pension schemes and other major investors into the UK’s science and technology sectors.
However, the changes do not alter the fact that trustees control pension scheme investment choices. Whether the proposals will unlock investment in the way the Government hopes will depend on the detail of the changes and the definition of “well-designed performance fees”.
