A few more comments on the topic of pensions reform, megafunds, investment, consumer duty, insurers and more, after the Mansion House speech;
Lily Megson, Policy Director at My Pension Expert, said, “The Chancellor’s ambition to create ‘pension mega funds’ to fuel UK growth is well-intentioned, but savers need transparency and involvement in decisions that impact their retirement funds. Committing to the “biggest pension reforms in decades” is not a positive boast if consumers – those people whose hard-earned pension savings is at stake – are not properly informed and engaged with, helping them understand both the potential returns and risks.
“Using pension funds to simultaneously boost investment into UK industries, trigger economic growth and improve the performance of those funds is, of course, all positive. But it cannot come at the expense of financial security for retirement planners. What’s more, truly meaningful, radical pension reform must address a much broader range of issues that blight the country’s pensions market – such as limited pension engagement, the gender gap, lack of financial literacy, and limited access to guidance and advice.
“To properly support UK savers, we need a balanced approach – one that doesn’t sacrifice long-term financial security in the pursuit of UK economic goals. Savers need confidence that their retirement is the priority, not just a means to balance the books.”
WEALTH CLUB
Commenting on the Mansion House speech, Jonathan Moyes, Head of Investment Research at Wealth Club said:
“The Labour government set its stall out as the party to deliver economic growth. It has been a counter-intuitive start. A substantial tax and spend budget, paid for by SMEs, were hardly the conditions in which SMEs would “invest, invest, invest”.
Today, we begin to see the real vision behind Reeve’s plans. Reforming the nation’s pension schemes represents a substantial opportunity for the country. By taking a leaf out of the Canadian pension book, Reeves’ may just provide the spark the UK economy needs to crowd in investment into key infrastructure projects, the energy transition and scale up enterprises.
The UK’s investment track record has been abysmal. According to the Institute for Public Policy Research, the UK has ranked bottom of the G7 league table in 24 of the last 30 years for investment as a share of national income. It is right to place some of this failure at the door of the pension industry, where an all too cautious approach, particularly after the financial crisis, saw schemes shun private investments, stunting both UK economic growth and the size of saver’s retirement pots.
Investors in startups could be the real winners from today’s announcement. It is no secret that the UK venture capital industry punches well above its weight internationally, but there remains a real need for large institutional investors to provide the firepower to turn startups into internationally competitive scale ups. Super-sized UK pension funds could be just the tonic. In turn, this would be highly attractive for startup investors and draw in additional startup capital. The Reeves’ Reforms, and the Pensions Investment Review in particular, could be transformational for the UK economy.”
CBI
Rain Newton-Smith, CBI CEO, said:
“Using her first speech as Chancellor at Mansion House, Rachel Reeves has set out a compelling vision to put the UK’s financial services sector on a path to drive growth across the wider economy. In challenging and uncertain times for the world economy, rebalancing regulation to encourage responsible risk-taking and innovation is essential to maintaining both the competitiveness of the sector and economy at large. With innovative companies, deep capital markets, and world-leading expertise, the UK has all the ingredients to deliver sustainable growth. By combining reforms that mobilise capital at scale with reforms that support a healthier attitude to risk-taking, the Chancellor is fostering the conditions for investment and innovation that our economy vitally needs.
“And with COP29 underway, the government’s commitment to making the UK a global hub for sustainable finance represents a strong signal of leadership on the international stage. From implementing the recommendations of the Transition Finance Market Review to consulting with industry on transition planning, these actions will help support a whole-economy transition in the UK and catalyse sustainable investment.
“But these reforms, while a significant step forward, cannot be viewed in isolation. Many businesses are facing a triple whammy of rising costs – in the form of NICs, the national living wage and the Government’s Employment Rights Bill, which hampers their ability to invest, grow and take risks. So, while the Chancellor is right to focus on mobilising finance through putting pension reform, capital markets and sustainability at the heart of the government’s growth mission, unlocking investment also needs competitive and profitable businesses.
“Government will need to work closely with the business community in developing its industrial strategy and rebuilding confidence, to ensure the UK can deliver the higher level of sustainable economic growth critical for driving up living standards for all.”
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