Europe, UK (Commonwealth Union) – The Chancellor has recently unveiled pension fund reforms as part of the government’s strategy to enhance British business and enhance returns for savers. This initiative mandates Defined Contribution (DC) pension funds to publicly disclose their UK investment levels.
The government’s auto-enrollment program has spurred a significant increase in investment flowing into UK pension funds, rising from under £90 billion in 2012 to approximately £116 billion in 2022. However, current disclosure standards for DC pension funds vary widely across the market and lack a comprehensive breakdown of UK investments, creating challenges for policymakers and savers in understanding where their funds are allocated.
By enforcing public disclosure of investment portfolios and returns, the government aims to enable employers and savers to compare schemes and make well-informed decisions. Additionally, the government is pursuing Value for Money (VFM) pension fund reforms to enhance outcomes for savers and streamline the DC pensions landscape. These reforms prioritize the focus of pension managers on delivering favorable returns for savers.
As per the proposed reforms, by 2027, all DC pension funds operating in the market will be mandated to disclose their investments in British enterprises, along with their associated costs and net investment returns. Additionally, pension funds will be obliged to publicly benchmark their performance against rival schemes, including a minimum of two schemes managing assets worth at least £10 billion each. Underperforming schemes failing to deliver satisfactory outcomes for savers will be prohibited from accepting new business from employers, with regulatory bodies such as The Pensions Regulator (TPR) and Financial Conduct Authority (FCA) empowered with comprehensive intervention measures.
Chancellor Jeremy Hunt says “We have already started on a path to drive growth, unlock capital for our most promising companies and improve outcomes for savers – and these new rules mean employers and savers can see how their money is invested and how the returns compare to other schemes.
