{"id":161783,"date":"2025-06-06T02:24:10","date_gmt":"2025-06-06T02:24:10","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/161783\/"},"modified":"2025-06-06T02:24:10","modified_gmt":"2025-06-06T02:24:10","slug":"uk-pensions-bill-pushes-more-investment-in-private-markets","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/161783\/","title":{"rendered":"UK pensions bill pushes more investment in private markets"},"content":{"rendered":"

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A contentious change in UK legislation around pensions will push more defined contribution workplace schemes to boost investment in British private markets, pension experts have said.\u00a0<\/p>\n

The Pensions Schemes Bill, published on Thursday, sets a framework to allow regulators to force the default funds of workplace DC schemes to invest in specific assets including private equity, private debt, venture capital or property.\u00a0<\/p>\n

The power, which would be enforced by the Financial Conduct Authority <\/a>and the Pensions Regulator, comes alongside a new requirement for multi-employer DC schemes to have assets of at least \u00a325bn by 2030, or 2035 provided that they can demonstrate they are on track to hit the target by that point. <\/p>\n

Michael Jones, partner at law firm Eversheds Sutherland, said: \u201cTying asset allocation to the scale requirements is a clever way of doing it\u2009.\u2009.\u2009.\u2009by giving the regulators the power to approve or not approve a sub-scale provider depending on if they are investing in the way the government wants.\u201d<\/p>\n

Gareth Henty, head of UK pensions at consultancy PwC, said the threat of mandation would \u201cfire the starting gun\u201d for large multi-employer schemes to invest more in private markets before they were forced to do so, at which might point \u201cwhat\u2019s left might not be as attractive as what\u2019s sourced early\u201d. <\/p>\n

The provision in the bill comes after 17 of the UK\u2019s largest DC workplace pension providers pledged to invest at least 5 per cent of their assets in UK private markets by 2030 under the Mansion House Accord signed last month.\u00a0<\/p>\n

The government hopes the voluntary commitment \u2014 alongside the creation of DC \u201cmegafunds\u201d of \u00a325bn \u2014 will push \u00a350bn of investment into UK scale-up companies, infrastructure and property. <\/p>\n

Chancellor Rachel Reeves last week confirmed she would create a \u201cbackstop\u201d power<\/a> to force large pension funds to back British assets, despite pushback from some City figures. <\/p>\n

Recommended<\/p>\n

\"Commuters<\/a><\/p>\n

The proposed reserve power for regulators to set asset allocation requirements will apply only to the default funds of large multi-employer DC schemes.\u00a0<\/p>\n

\u201cThere was a genuine concern that it would apply across the book, including defined benefit and non-commercial schemes,\u201d Jones said.\u00a0<\/p>\n

The power to direct investments also comes with a sunset clause of December 2035, after which it will expire if not used already.\u00a0\u00a0<\/p>\n

\u201cThe introduction of a reserve power to allow government to direct how defined contribution schemes invest will require very close scrutiny,\u201d said the Pensions and Lifetime Savings Association. <\/p>\n

The trade group added that it was \u201cparticularly concerned that the sunset clause extends beyond the current parliament\u2009.\u2009.\u2009.\u2009and contains very broad discretions for the secretary of state to direct investments or set targets\u201d.<\/p>\n

Sir Steve Webb, a former pensions minister and now a partner at consultancy LCP, said: \u201c[Ministers] have put in the statute book a power that someone else can pick up\u2009.\u2009.\u2009.\u2009nobody should have this power\u2009.\u2009.\u2009.\u2009it creates instability and uncertainty for pension schemes\u201d.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"Stay informed with free updates Simply sign up to the Workplace pensions myFT Digest — delivered directly to…\n","protected":false},"author":2,"featured_media":161784,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3093],"tags":[51,474,2499,16,15],"class_list":{"0":"post-161783","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-personal-finance","11":"tag-uk","12":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114634048407336293","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/161783","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=161783"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/161783\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/161784"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=161783"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=161783"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=161783"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}