The UK government is set to announce new powers in the Pension Schemes Bill, allowing ministers to compel pension funds to invest in British assets. This reserve power will enable binding asset allocation targets for workplace pension schemes, focusing on UK-based infrastructure, private equity, and start-ups. It aims to inject billions into the economy, following the Mansion House Accord, which encouraged investment in private assets. Though the government intends to use this power sparingly, its existence raises concerns in the pensions industry about government overreach.
While the accord was hailed as a step forward in aligning retirement savings with national economic priorities, the government had already signalled its intent to back the initiative with more forceful measures if needed.
The Mansion House Accord shows defined contribution schemes are voluntarily investing more in infrastructure and businesses. But to support further certainty and ensure fairness across the sector, the government will take a reserve power to set asset allocation targets if necessary.
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