{"id":226052,"date":"2025-06-30T07:28:10","date_gmt":"2025-06-30T07:28:10","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/226052\/"},"modified":"2025-06-30T07:28:10","modified_gmt":"2025-06-30T07:28:10","slug":"pension-pots-of-savers-at-risk-from-new-uk-rule-industry-experts-warn","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/226052\/","title":{"rendered":"Pension pots of savers at risk from new UK rule, industry experts warn"},"content":{"rendered":"

Stay informed with free updates<\/p>\n

Simply sign up to the Pensions industry myFT Digest — delivered directly to your inbox.<\/p>\n

A contentious change in UK legislation is not consistent with what ministers had promised and could harm the retirement outcomes of millions of savers, some pension experts have warned.<\/p>\n

The pension schemes bill, expected to become law next year, proposes to give regulators a power to force defined contribution (DC) schemes to invest a minimum amount in private markets.<\/p>\n

\u201cThe provision isn\u2019t framed as a reserve power and doesn\u2019t promise that there won\u2019t be detriment to pension savers,\u201d said Charles Randell, former chair of the Financial Conduct Authority. <\/p>\n

\u201cThis is a pity, given the case for the intervention doesn\u2019t seem to be very convincing in the first place. I worry that this could undermine trust in pension saving.\u201d<\/p>\n

The power comes alongside a new rule that workplace DC schemes must have at least \u00a325bn of assets in their default funds by 2030, or 2035 provided they can show credible plans to reach the threshold in five years\u2019 time. <\/p>\n

Some experts warn that the move to give the power to regulators could force pension funds<\/a> to invest in line with the voluntary Mansion House Accord.<\/p>\n

Under the accord, 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, provided the assets were sufficiently attractive. <\/p>\n

Zoe Alexander, director of policy at the Pensions and Lifetime Savings Association trade group, said the drafting of the power to apply an asset allocation test in the bill \u201ccould see the voluntary commitments of the Mansion House Accord become a regulator-led condition for approval\u201d. <\/p>\n

\u201cThe government has previously said it intends to keep any mandation power in reserve, and so this drafting has caused concern,\u201d Alexander said, adding that state intervention in investment decisions \u201ccould erode trust and potentially lead to poorer returns\u201d. <\/p>\n

The move is part of the government\u2019s wider reforms designed to consolidate Britain\u2019s fragmented system and kick-start growth by encouraging more domestic investment by UK funds. <\/p>\n

The pension regulator has also said it is actively encouraging schemes to adopt long-term investment strategies that support both member outcomes and national growth.<\/p>\n

The power to set asset allocation targets comes with a sunset clause of December 2035, when the default fund \u00a325bn threshold must be met, after which the power will expire if not used already.\u00a0<\/p>\n

The government has insisted that a push to make more DC workplace funds invest more in private markets would improve saver outcomes, but research from its own actuarial department shows only slight outperformance of portfolios with private market holdings. <\/p>\n

A person close to Treasury\u2019s thinking said the power to mandate asset allocation was not expected to be used automatically alongside the approval for default funds reaching \u00a325bn. <\/p>\n

They said the department was aware of concerns that the clauses in the bill were \u201cinsufficiently clear\u201d on this point and would amend them if necessary.<\/p>\n

The Treasury said the power to set asset allocation targets was \u201cthere as a backstop\u201d and added \u201cwe do not expect to have to use it because we\u2019re confident that schemes are now moving in the right direction, towards a greater focus on diversification and investment returns for savers\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"Stay informed with free updates Simply sign up to the Pensions industry myFT Digest — delivered directly to…\n","protected":false},"author":2,"featured_media":226053,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3093],"tags":[51,474,2499,16,15],"class_list":{"0":"post-226052","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\/114771139185341585","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/226052","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=226052"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/226052\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/226053"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=226052"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=226052"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=226052"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}