The King’s speech, which was delivered by King Charles III to introduce the new Labour government’s parliamentary agenda, has put some meat on the bones of the government’s plans on growth, pensions and potential investments.
Central to the speech was a Pensions Schemes Bill, reaffirming the intent to have schemes play a more significant role in supporting the UK economy through productive investments.
“It is clear that the government wants pensions, and the National Wealth Fund bill to play a role in providing meaningful stimulus to UK productivity, said Calum Cooper, head of pensions policy innovation at Hymans Robertson.
“For this, the pensions industry will need clarity – both a practical road map and clear and attractive opportunities to invest at scale,” Cooper added. “Hopefully, this bill will play an important part in stimulating this thinking and direction too. There is a huge societal opportunity in unlocking the productive potential of our £2.5trn of pensions.”
“Pension schemes can, and do, play a significant role in supporting the UK economy but there is potential for them to play a more significant role,” the government said in a document, released alongside the King’s Speech.
Forward looking
Chris Cummings, chief executive of the Investment Association, welcomed the government’s focus on securing economic stability and growth and the focus on encouraging investment.
The speech, he said, “offers a forward-looking plan which recognises the importance of partnership with the private sector, and the investment management industry will play an active role in achieving these aims”.
“By taking into account the individual needs of investors and the role the pensions system can play in delivering growth, there is great potential to benefit UK households and our economy,” Cummings added.
“The proposed Pensions Scheme Bill will be fundamental in taking this agenda forward,” Cummings said. “The focus on implementing a ‘value for money’ framework for defined contribution schemes will place a greater emphasis on value, rather than a narrow focus on cost, leading to improved outcomes for consumers.”
In addition, Cummings said he is “pleased” that the government has listened to investors and will deliver on the creation of a new empowered regulator – the Audit, Reporting and Governance Authority (ARGA) – as part of the draft Audit Reform and Corporate Governance Bill.
“Putting ARGA on a statutory footing will provide a boost to trust, transparency and accountability in UK companies, auditors and capital markets and reinforce the UK as a trusted location for investment,” Cummings said.
And enshrining the National Wealth Fund in legislation is a “clear signal” from the government of its intent to mobilise much needed capital for green investments, Cummings said.
“The Climate Change Committee estimates that an additional £50bn to £60bn of capital investment will be required every year over the next decade to deliver the UK’s net-zero ambitions, and there is an urgent need to build the pipeline of investable infrastructure projects in the UK to support this,” he added.
“We strongly support this ambition to channel much needed capital into British businesses and infrastructure projects to cement the UK as a leader in sustainable finance,” Cummings concluded.
Business as usual
But for former pensions minister, and now LCP partner Steve Webb, the King’s Speech represents little difference in pensions policy when compared to the previous government.
“This Pension Schemes Bill very much represents business as usual when it comes to pensions policy,” he said. “There appears to be nothing in the legislation that so far represents a distinctively Labour Party approach to pensions, and a Conservative minister could happily have brought forward this legislation.”
This does mean ultimately that any distinctive policies will have to await legislation later in this parliament and may take time to have effect, Webb added.
Although Calum Cooper did express disappointment at one omission in the King’s Speech. “Given how important pensions are to everyone it’s disappointing to see that the pensions review, promised in the Labour manifesto, was not included in the King’s Speech,” he said. “An independently led review, with cross-party support would give us the best chance of providing meaningful change for a generation that will ensure sustainable pensions,” he added. “We hope it will be high on the government’s agenda and included in the chancellor’s budget in the Autumn.”
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