Europe UK (Commonwealth Union) – The Chancellor recently launched the ‘Mansion House Reforms’ that may raise pensions by more than £1,000 an annum in retirement for an average earner saving over the course of a career.
According to a statement the ‘Mansion House Reforms’ may bring in an extra £75 billion for high growth businesses, as the reforming in defined contribution pension schemes is set to elevate a typical earner’s pension pot by 12 percent in the course of a career.
A series of wide-ranging reforms is set to significantly boost pension funds, potentially increasing them by up to £16,000. These comprehensive measures will not only result in substantial growth in pension pots but also unleash an estimated £75 billion of additional investment from defined contribution and local government pensions. These reforms align with the Prime Minister’s emphasis on fostering economic growth and ensuring concrete advantages for pension savers.
With a pension market valued at over £2.5 trillion, the United Kingdom holds the distinction of having the largest pension market in Europe. The introduction of Automatic Enrolment in the past decade has successfully encouraged an additional ten million individuals to save for their future, resulting in a remarkable £115 billion saved in 2021. However, the returns on these investments are being limited due to the current investment strategies employed. A striking contrast can be observed when comparing Australian pension schemes, which allocate ten times more funds to private markets, thereby reaping substantial benefits that UK savers are unfortunately missing out on.
To rectify this disparity and create a more equitable landscape, the Chancellor and the Lord Mayor have thrown their support behind an agreement among nine prominent Defined Contribution pension providers in the UK. These providers collectively manage assets exceeding £400 billion and represent the majority of the Defined Contribution workplace pensions market in the country. This agreement establishes a shared objective: by the year 2030, these providers will allocate 5% of their assets in default funds to investments in unlisted equities.
