Autumn Statement Pensions Reform 2023
The government has announced a package to improve pension savers' returns and boost growth in the UK, progressing reforms set out at Mansion House.
At Autumn Statement the government has announced a comprehensive package of pension reform that will provide better outcomes for savers, drive a more consolidated pensions market and enable pension funds to invest in a diverse portfolio. These measures represent the next steps of the Chancellor’s Mansion House reforms and meet the 3 golden rules:
- to secure the best possible outcomes for pension savers
- to prioritise a strong and diversified gilt market
- to strengthen the UK’s competitive position as a leading financial centre
The package sits alongside the government’s comprehensive capital market reforms, to boost the attractiveness of markets, and make the UK the best place to start, grow and list a company.
Providing better outcomes for savers
To provide better outcomes for savers the government is:
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introducing the multiple default consolidator model for defined contribution (DC) schemes, to enable a small number of authorised schemes to act as a consolidator for eligible pension pots under £1,000
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launching a call for evidence for DC schemes on a lifetime provider model to simplify the pensions market by allowing individuals to move towards having one pension pot for life, and on a potential expanded role for Collective DC (CDC) schemes in future
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publishing an update that proposes placing duties on DC occupational pensions trustees to offer decumulation services and products at an appropriate quality and price when savers access their pension assets, either themselves or through a partnership arrangement
Driving a more consolidated market
To drive a more consolidated pensions market government is:
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welcoming the current trend of DC pension fund consolidation and expecting to see a market in which the vast majority of savers belong to schemes of £30 billion or larger by 2030
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welcoming the Financial Conduct Authority (FCA) and the Pensions Regulator (TPR) announcements on next steps towards implementing the Value for Money framework in the DC workplace pensions market
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publishing a review of the Master Trusts market, 5 years after the 2018 Master Trusts regulations came into force
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consulting this winter on how the Pension Protection Fund can act as a consolidator for defined benefit (DB) schemes unattractive to commercial providers
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confirming a March 2025 deadline for the accelerated consolidation of Local Government Pension Scheme (England and Wales) assets, setting a direction towards fewer pools exceeding £50 billion Assets Under Management, and implementing a 10% allocation ambition for investments in private equity
Enabling pension funds to invest in a diverse portfolio
To enable pension funds to invest in a diverse portfolio government is:
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consulting this winter on whether changes to rules around when DB scheme surpluses can be repaid, including new mechanisms to protect members, could incentivise investment by well-funded schemes in assets with higher returns
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reducing the authorised surplus payments charge from 35% to 25% from 6 April 2024
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welcoming TPR’s announcement that they will implement a register of trustees and update the trustee toolkit
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engaging with industry on proposals to ensure all aspects of the pensions industry are supporting best outcomes for savers, including how to shift employer incentives away from low fees towards long-term pension investment performance
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committing £250 million to 2 successful bidders in the Long-term Investment for Technology and Science (LIFTS) initiative, subject to final agreement
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following positive feedback from industry, confirming its intention to establish a Growth Fund within the British Business Bank (BBB)
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developing a fellowship course targeting mid-career science and technology Venture Capital (VC) investors, similar to the Kauffman Fellowship in the US, to be operational in 2024