The government will press on with its planned reserve power to direct defined contribution (DC) fund investment, according to amendments to the Pension Schemes Bill published on Friday.
As pensions minister Torsten Bell previously stated, the government has reworded the clause, which was removed by members of the House of Lords, to explicitly limit the reserve power in line with the Mansion House Accord’s terms.
Every other amendment put forward by the Lords has been rejected by the government, with no explanation given.
“This is still a political hand reaching into people’s retirement savings… Pensions are people’s hard-earned savings, not piggy banks for the government of the day.”
Helen Whately, shadow work and pensions secretary
Conservative MP Helen Whately, the shadow work and pensions secretary, called the amendment a “U-turn” and argued that it was “an admission that the mandation powers are indefensible”.
She continued: “No doubt the government will try again to claim this is no different from the Mansion House Accord. It looks more like it than before, but there’s a world of difference between a voluntary industry agreement and the law.
“This is still a political hand reaching into people’s retirement savings. That’s wrong – and that’s why mandation should be scrapped altogether. Pensions are people’s hard-earned savings, not piggy banks for the government of the day.”
Helen Whately speaks to Always A Pensions Angle on the mandation clause
The Always A Pensions Angle podcast team visited the Houses of Parliament last month to speak to Conservative MP Helen Whately about her party’s opposition to the mandation clause. Watch the video below, or listen to the full episode here.
Pensions UK calls for further limits on mandation
Trade body Pensions UK welcomed the government’s amendment but also called for the sunset clause – specifying the date at which the power can no longer be used – to be brought forward to limit political risk.
Julian Mund, chief executive of Pensions UK, said the amendment “addresses our most serious concern” by bringing the mandation power into line with the Mansion House Accord.
“Pensions UK remains opposed in principle to the government directing how DC schemes invest savers’ money, and [is] concerned by the precedent set by the inclusion of any reserve power.”
Julian Mund, Pensions UK
“We would like, in addition, to see the sunset clause brought forward to lessen the political risk attached to the power,” Mund added. “These are changes that Pensions UK has consistently called for, should the reserve power remain in the bill, and we are pleased that the government is listening.
“Pensions UK remains opposed in principle to the government directing how DC schemes invest savers’ money, and [is] concerned by the precedent set by the inclusion of any reserve power.
“While we do not expect the power to be used, we are clear that asset allocation decisions must rest with trustees acting in their members’ best interests.”
Mund also said that Pensions UK would be setting out its ideas and proposals for government support for the Mansion House Accord in a publication to be released “later this spring”.
