Chancellor Jeremy Hunt confirmed there will be greater scrutiny of the performance of defined contribution pension funds in his 2024 Spring Budget speech today.
He told MPs in the House of Commons that the government would build on the Edinburgh and Mansion House reforms to unlock more pension funds capital, reaffirming announcements made a few days ago.
“We’ll give new powers to The Pensions Regulator and Financial Conduct Authority to ensure better value from defined contribution schemes by judging performance on overall returns not costs. We’ll make sure there are vehicles to make it easier for pension funds to invest in UK growth opportunities.”
Hunt voiced concern that other markets, such as Australia, generate better returns for pension savers with more effective investment, particularly in high quality domestic growth stocks.
“So I will introduce new requirements to DC and local government pension funds to disclose publicly their level of international and UK equity investment.”
He added that the government will continue to explore how savers could be allowed to take pension pots with them when they change jobs.
Hunt said he would consider further action if UK pension performance fails to move closer to international best practice.
However, Kate Smith, head of pensions at Aegon UK, was “incredibly disappointed” that there was no mention of auto-enrolment enhancements.
“Having been announced as part of the 2017 Auto-enrolment Review, the longstanding plan has been to lower the auto-enrolment eligibility age from 22 to 18, as well as for workplace pension contributions to be calculated from the first £1 earned rather than on salary above £6,240,” she said
“We’ve now been waiting almost seven years for these changes to be implemented, which at the current minimum rate of 8 percent, would see contributions boosted by £499 a year for millions of savers each year.
“It’s time to scratch that itch and get on and implement the reforms, enabling more people to save more into pensions from an earlier age. Delaying will only build up retirement income adequacy problems for the future.”
