\n\t\t\t\t\tBill going through Parliament includes clause allowing government to tell pension schemes how to invest their cash\t\t\t\t\t <\/p>\n
The Bank of England <\/a>Governor, Andrew Bailey<\/a>, has made a \u201cnuclear\u201d intervention by saying he does not agree with potential Government plans<\/a> to mandate that pension funds<\/a> invest more in UK assets.<\/p>\n The Pension Schemes Bill, which is currently on its passage through Parliament, includes a clause which would allow the Government to tell pension schemes how to invest their cash.<\/p>\n The Government has insisted it does not want to use the power, but has put it in the bill as a backstop, if needed, to get schemes to invest a minimum proportion in ways it hopes would boost the economy \u2013 such as in UK infrastructure and UK private markets.<\/p>\n But speaking about mandating on Wednesday, Bailey said: \u201cI do not support mandating, I don\u2019t think that\u2019s appropriate.\u201d<\/p>\n Pension experts have said his comments will be \u201cvery unwelcome\u201d to the Government.<\/p>\n Sir Steve Webb, ex-pensions minister and now a partner at LCP, said: \u201cThe governor will not have chosen lightly to be so critical of Government policy, and his nuclear intervention will be very unwelcome at DWP [Department of Work and Pensions].\u201d<\/p>\n He added: \u201cBut the governor speaks for many in thinking that the Government is crossing a line if it presses ahead with plans to tell pension schemes how to invest.<\/p>\n \u201cWhilst pension assets can certainly be used more productively, it is ultimately for the trustees of pension schemes to decide how to invest in the best interests of their members, and not for ministers to tell them how to invest. <\/p>\n \u201cThis challenge raises serious questions about whether this policy will survive scrutiny in the House of Commons and House of Lords over the coming months.\u201d<\/p>\n Tom Selby, director of public policy at AJ Bell, added: \u201cBailey\u2019s comments essentially blow the doors off government claims that mandating, or threatening to mandate, pension funds invest in the UK economy is some sort of guaranteed win-win for savers and the chancellor. <\/p>\n \u201cThe reality is that this approach comes with risks \u2013 lower returns for pension savers \u2013 and even threatening to mandate could force shifts in asset allocation, driven by government policy rather than pension savers\u2019 best interests. It is a risky strategy and policymakers need to be honest about what those risks are.\u201d<\/p>\n Rachel Reeves and Sir Keir Starmer have made economic growth a key part of the Government\u2019s strategy \u2013 and are relying on doing so to deal to some extent with the UK\u2019s growing debt problems.<\/p>\n But they have been dogged by a stubbornly flatlining economy.<\/p>\n On Tuesday the Office for Budget Responsibility warned that the UK\u2019s finances are currently \u201cunsustainable\u201d<\/a>.<\/p>\n Mansion House Accord<\/p>\n The bill was debated by MPs for the first time on Monday.<\/p>\n But before this, the Government has tried to increase pension investment in the UK via voluntary means.<\/p>\n