Commenting following the UK Chancellor Rachel Reeves’ Mansion House Speech in the City of London last night, Debbie Webb, Pensions Board Chair, Institute and Faculty of Actuaries, said:
“The IFoA is supportive of the Chancellor’s efforts to stimulate more growth in the UK economy and improve Defined Contribution (DC) and Local Government Pensions Scheme (LGPS) outcomes. This includes efforts to explore consolidation among DC schemes by establishing local government megafunds of greater scale and to increase consolidation of DC schemes more generally.
“As the pensions minister recognises, the foremost purpose of these assets is and will always be to provide security in retirement. We agree. It’s understandable that the Government has a say in how defined benefit assets to local government workers are invested. However, when it comes to defined contribution savers, their needs should be the driving factor in investment decisions. This means balancing the need for sufficient investment in growth assets with the associated risks and costs. Too much consolidation could have downsides too – more systemic risk and insufficient competition between providers to drive further innovation and improve efficiencies. Size is itself only a rough proxy for quality of DC schemes, and it is quality which will ensure the best outcomes for pension savers.
“The investment review that the Government has just concluded is only one part of a much larger collective effort to modernise the UK pensions system. Improving investment outcomes for DC savers is important, but that alone will not solve the pensions adequacy problem. There are important industry discussions around extensions to automatic enrolment, collective pension schemes and innovative scheme designs that hold the key to ensuring retirement security for pension savers.”
Commenting on the Chancellor’s Mansion House speech, Miles Celic, Chief Executive Officer, TheCityUK said:
“It is very encouraging to hear the Chancellor underline the important role financial and related professional services has to play in delivering growth. The issues she covered, including boosting investment, pensions reform, emphasising the regulators’ remit around growth and competitiveness and the need for sensible recalibration on risk, as well as her commitments to support the UK to become the world’s leading hub for sustainable finance, echo much of what our industry has been calling for.
“Her focus on innovation and modernisation, including a pilot for delivering a Digital Gilt, is also positive to hear, as is her intention to publish a pro-growth, pro-competitiveness long-term strategy for the industry. These are all critical to ensuring the UK’s competitive position as a world-leading international financial centre. We look forward to continuing to work with the Chancellor and the government to deliver these reforms and initiatives.”
BROADSTONE
The Chancellor’s yesterday evening laid out proposals to “unlock the full potential” of mutuals, co-operatives and credit unions in her Mansion House speech.
The statement said: “The government recognises the invaluable role of the mutual and co-operative sector in driving inclusive growth across the UK. It is therefore announcing a package to help unlock the full potential of the sector. This includes publishing a call for evidence on reform to credit union common bonds in Great Britain, writing to the Financial Conduct Authority and Prudential Regulation Authority asking them to produce a report on the mutuals landscape in 2025, and welcoming the establishment of an industry-led Mutual and Co-operative Business Council.”
Cara Spinks, Head of Life & Health at leading independent financial services consultancy Broadstone, commented: “It is encouraging that the Chancellor recognises the benefits of a flourishing Co-operative and Mutual sector.
“For starters, it makes a vast contribution to our public health services – a key focus for the government and future driver of growth – with cost-savings of around £1 billion to the NHS, welfare state and employers through health protection policies. Their bespoke, customer-centric approach improves financial inclusion at a time when it has never been more important to provide financial services to a diverse range of customers.
“The pledge to support Credit Unions is also to be welcomed. These institutions play a growing role in the financial ecosystem with Credit Union lending rising from £1.6 billion at the end of 2019 to £2.3 billion as of the end of 2023, a rise of 42%.”
MARSH MCLENNAN
Commenting on the news the UK Government will consult on the introduction of a new framework for UK-based captive insurance companies, Chris Lay, CEO of Marsh McLennan UK, said:
“This is an important step forward to help the UK’s world leading insurance market become an important home for captive insurers.”
He added: “The regulatory regime must be developed to allow a UK captive regime to compete on the international stage. Establishing a proportionate and competitive UK captive framework could deliver a major boost to the UK insurance market, demonstrating our innovation and signalling we are open for business.”
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