In his Autumn Statement this morning, the UK chancellor of the exchequer provided updates on the Mansion House reforms and announced new consultations to further the nation’s economic growth.
After King Charless III failed to mention pension reforms in the King’s Speech on 17 November, the pensions industry was hopeful the Autumn Statement would deliver much needed updates.
In today’s speech, Jeremy Hunt said he would bring forward his Mansion House reforms “starting with measures to consolidate the industry by 2030”.
He added: “The majority of workplace DC savers will have their pension pots managed in schemes over £30bn by 2040 and all local government pension schemes will be invested in pools of £200bn or more.”
He noted his support for the establishment of investment vehicles for pension funds to use, including through the Long-Term Investment for Technology and Science (LIFTS) initiative, a new growth fund run by the British Business Bank, and opening the Pension Protection Fund (PPF) as an investment vehicle for smaller defined benefit (DB) pension schemes.
In a supporting document, the government detailed that it would consult this winter on how the PPF can act as a consolidator for schemes “unattractive to commercial providers” and whether changes to rules around when surpluses can be repaid, including new mechanisms to protect members, could incentivise investment by well-funded schemes in assets with higher returns.
It added that the authorised surplus repayment charge will also be reduced from 35% to 25% from 6 April 2024.
In addition to the update on the reforms announced back in July, the chancellor said the government would consult on giving savers a legal right to require a new employer to pay pension contributions into their existing pension pot if they choose, meaning people can move to having one pension pot for life.
Hunt said: “These reforms could unlock an extra £75bn of financing for high growth companies by 2030 and provide an extra £1,000 pounds a year in retirement for an average earner.
Hunt also proposed further capital market reforms to boost the attractiveness of UK markets to “make sure the UK remains one of the most attractive places to start, grow and list a company”.
Not mentioned in the speech but included in the accompanying document was also a consultation on surplus extraction arrangement for DB schemes, which is expected this winter, and will look at an appropriate regime under which surpluses can be repaid and enable 100% PPF coverage for DB schemes that opt to pay a higher levy. The authorised surplus payments charge will be reduced from 35% to 25% from 6 April 2024.
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