Chancellor Philip Hammond wants private sector investors to fund half of an £800m (€917m) government-backed Digital Infrastructure Investment Fund to be launched later this year.
In his Budget report, announced to the UK parliament’s lower house this week, Hammond said the fund would “accelerate the deployment of full-fibre [broadband] networks by providing developers with greater access to commercial finance”.
The chancellor also laid out plans for investment in transport infrastructure, to be backed by a separate government fund.
Sir Merrick Cockell, chairman of the London Pensions Fund Authority (LPFA), welcomed the new investments but urged the government to push “large-scale innovative projects that will secure growth and protect our international competitiveness”. He cited Crossrail 2 – a proposed major train line stretching north to south across London – as an example of such a project.
Although the speech and report was notable for its lack of new pensions policy, Hammond introduced a 25% charge for transfers to qualified recognised overseas pension schemes (QROPS). The charge was aimed at individuals seeking to reduce their tax bill by transferring pensions overseas.
“Exceptions will apply to the charge allowing transfers to be made tax-free where people have a genuine need to transfer their pension, including when the individual and the pension are both located within the European Economic Area,” Hammond’s report stated.
Meanwhile, the £46bn BT Pension Scheme – the UK’s largest corporate pension fund – is to play a pivotal role in changes to the structure of BT subsidiary Openreach.
Openreach is responsible for the upkeep of the UK’s phone and broadband network and is fully owned by BT, a formerly public-owned telecoms provider. After complaints from competitors, communications regulator Ofcom struck a deal with BT to formally separate Openreach within its corporate structure.
This would require new pension arrangements for 32,000 current and former Openreach workers, as well as a clarification as to whether they would be protected by BT’s Crown Guarantee. This is a promise from the government to continue to back the pension scheme even if BT is wound up.
A statement from the BT Pension Scheme said: “We are pleased that BT and Ofcom have reached agreement on a long-term regulatory settlement in relation to the Digital Communications Review. Going forward, the Trustee will continue its active engagement with government, BT and other stakeholders to seek to conclude the remaining pension matters in the interests of our members so that these arrangements can proceed.”
Elsewhere, the local government pension scheme for the Scottish Borders Council has appointed Northern Trust to provide a range of services for its £550m portfolio.
Northern Trust will be responsible for global custody, accounting, performance measurement, cash management and foreign exchange services. The group has mandates with eight of Scotland’s 11 public pension funds.
Finally, the Financial Conduct Authority has launched a consultation to update its guidance around redress for missold transfers out of defined benefit (DB) pension schemes.
The regulator’s rules have not been updated since the government introduced “freedom and choice”, removing the requirement for members of defined contribution schemes to buy an annuity at retirement, which has made transferring out of a DB scheme more attractive for some individuals. It has also led to a spike in fraudulent schemes.
The consultation is open until 10 June and is available here.