The UK government has confirmed that the report stage of the Pension Schemes Bill will begin on 3 December, with members of parliament (MPs) preparing for another round of debates over the Bill’s contentious ‘reserve power’ clause.
The Bill, introduced in the 2024 King’s Speech following Labour’s election victory, has already cleared its first and second readings and the committee stage, during which hundreds of amendments were considered.
At the report stage, MPs will have another opportunity to propose changes. Among the amendments is a challenge to clause 40, which sets out the government’s unused but controversial power to mandate pension investment in private markets.
The provision has triggered persistent concern across the pensions industry, prompting repeated calls for its removal.
Pensions minister Torsten Bell has repeatedly insisted the government has no intention of exercising the power. That assurance, however, has done little to settle questions about why the clause remains in the Bill, particularly given its 2035 sunset clause, which goes well beyond the life of the current parliament.
With concern over how the power might be used, the amendment, tabled by MP Mark Garnier, introduces the requirement on the secretary of state to prepare and publish a report regarding what barriers pension funds are facing that are preventing them from investing back into the UK, how financial interests of members would be affected and what effects the proposed measures could be expected to have on economic growth of the country.
The government would then be required to respond to any recommendations.
Garnier explained that the amendment would effectively block the use of the reserve power until the government demonstrates why it is necessary and addresses any issues previously highlighted.
Another MP, Bob Blackman, has called for the 2035 sunset clause to be scrapped and the power restricted to the current parliament. His amendment would automatically repeal certain provisions if they are not commenced before the end of this term.
Zoe Alexander, executive director of policy and advocacy at Pensions UK, welcomed the focus on transparency. She said: “Requiring more detail in the evidence report to be produced before any reserved power is exercised is vital for trust and good governance.”
She added that mandating allocations risks cutting across trustees’ fiduciary duties, noting: “The industry works best when decisions are voluntary within a strong regulatory framework. We are calling for the reserve power to be more tightly restricted, in line with the commitments in the Mansion House Accord.”
Neil Maines, senior investment consultant at XPS Group, said the real focus should be on dismantling barriers rather than documenting them. He argued that wider initiatives – including supply-side reforms, the Value for Money framework and provider consolidation – are already easing constraints on investment in UK productive finance.
“We therefore don’t believe the reserve power will be needed, and should be removed rather than amended,” he said.
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