More Pension Reforms Coming in Chancellor’s First…

From Morningstar: 2024-11-14 06:06:45

UK pension “megafunds” will be created to unlock billions for investments in businesses and infrastructure. Reforms consolidating defined contribution schemes will be introduced through a new Pension Schemes Bill, pooling assets from 86 local government pension schemes. The Local Government Pension Scheme will manage £500 billion by 2030, supporting economic growth.

DC pension schemes are set to manage £800 billion by 2030. The government will consult on setting a minimum size requirement for multi-employer schemes. Megafunds will allow investment in assets with higher growth potential, potentially delivering £80 billion in new businesses and infrastructure.

Chancellor Rachel Reeves will outline the pensions shake-up, aiming to boost savings in retirement and drive economic growth. The move is supported by Deputy Prime Minister Angela Rayner and Pensions Minister Emma Reynolds. Megafunds will need to meet rigorous standards and be authorized by the Financial Conduct Authority.

Criticism from the hospitality sector and warnings of job losses due to changes in employers’ national insurance contributions come amid the reforms. Some of Britain’s biggest retailers have expressed concerns over the Budget’s impact on inflation and job losses. The British Retail Consortium warns that job losses may be “inevitable”.

Industry experts support the reform proposals, seeing them as a positive step towards delivering value for money for savers. However, caution is urged regarding the risks associated with using members’ money to drive economic growth. The effectiveness of consolidation may be impacted by the availability of viable investment opportunities.



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