Rachel Reeves issued brutal dressing down over pensions | Politics | News
Rachel Reeves has been warned that money in people’s pension pots shouldn’t be a “plaything” for governments. Former pensions minister, Sir Steve Webb, a partner at consultancy LCP, said confidence in pensions could be seriously undermined if savers believe their best interests aren’t the top priority of their scheme.
His warning comes as countries including the UK pursue steps to channel large pension pots towards domestic investment to boost sluggish economic growth rates. Some pensions experts have raised concerns such moves could affect returns and discourage pension saving.
Sir Steve told the Financial Times: “The money in people’s pensions should not be a plaything of governments.”
He added it is already hard enough to get people to lock money away and save for the long-term, adding confidence in pensions could be “seriously undermined” if savers believe their best long-term interests are no longer the top priority of their pension scheme.
Under the Chancellor’s reforms, £25billion “mega-funds” would be created and instructed to divert a portion of their funds towards UK investments.
The Government, citing DWP analysis, has insisted UK pension schemes make lower levels of domestic investment relative to others and there has been a significant drop in the level of defined contribution (DC) pension investment in UK equities over the last decade.
Ms Reeves said in May last year that the reforms would result in better returns for workers and billions of pounds invested in green energy and high-growth businesses.
Some 17 of the country’s biggest defined contribution pension firms gave the Chancellor’s move a thumbs up in a voluntary agreement announced at the time.
They committed in principle to invest at least 5% of their assets in private UK markets by the end of the 2020s.
The Government has granted itself powers which would see regulators force providers to honour the commitment should they fail to do so.
While experts have broadly welcomed Government plans to consolidate funds to put more money in people’s pockets, they have also called for reforms, outcomes and funds fiduciary duty at their core.
Pension scheme providers have a legal obligation to act solely in the best financial interests of their members and put members’ needs above their own or anyone else’s.
