
Who doesn’t love a good fairground ride? The Pension Schemes Bill certainly caters for every taste. It covers a wide variety of provisions, from thrill-seeking measures intended to capitalise on the vast amount that is saved in UK pension funds, through to measures likely to appeal to a more sedate nature, such as amendments to legislation that doesn’t quite work in the current economic and political climate.
In a September 2024 report by the Pensions Policy Institute (PPI), the PPI estimated that the assets of the UK pension sector ‘towards the end of 2023’ were valued at just under £3 trillion, with defined benefit (DB) representing 55% and defined contribution (DC) having topped £1 trillion towards the end of 2023. It is worth noting that of that £3 trillion, workplace pensions account for over £2 trillion in assets. It is no small wonder then that this has been the focus of the chancellor’s pensions reform.
So far as growing the economy is concerned, the chancellor has adopted the approach of juggling three balls in the air at the same time. These are: (1) the introduction of measures to scale up DC pension funds so that they are in a better position to invest in a broad range of assets, including illiquid assets such as infrastructure and the UK’s private markets, (2) implementation of a framework for DB commercial consolidators, to facilitate scale in the DB sector, and (3) the introduction of measures to facilitate the release of pension fund surpluses in DB schemes back to employers and pension scheme members, with the intention that this then flows back into the UK economy.