Reeves hands herself ‘dangerous' powers to control pension pots

Telegraph

2 days ago

Rachel Reeves has granted herself 'dangerous' new powers to direct where millions of savers' pension cash is spent.
The Government's Pensions Bill includes sweeping provisions that will allow the Chancellor to force pension funds to invest in private equity, debt and land in an attempt to boost the UK economy.
Details of the new legislation were published on Thursday.
The Government has insisted that savers' interests will always be put first, with mandating powers only serving as a backstop to ensure investment in British assets.
However, Sir Steve Webb, a former pensions minister, said: 'Legislating to allow governments to tell pension schemes how to invest is a very dangerous precedent.
'Whilst ministers offer assurances that this is just a backstop power that they hope not to use, the precedent has been set. This Government or a future government could use a power of this sort to promote their own political agendas, potentially to the detriment of pension savers.'
Sir Steve, who is now a partner at Lane, Clark and Peacock (LCP), said the law left the door open to sweeping changes that could destabilise the market.
The former Liberal Democrat MP said the powers could be used by a future Reform government to instruct funds to abandon 'woke' investments, including net zero, for example.
Sir Steve said: 'We already have trustees whose job is to make sure that the member interest is protected, based on expert advice over things like investment strategy, and these decisions should be beyond the reach of politicians – of whatever party'.
'Very bad precedent'
A so-called sunset clause in the Bill means the power to mandate investment expires at the end of 2035. However, Sir Steve pointed out that this still left the door open for a new government to instruct pension funds to invest in a whole range of assets.
While a separate clause suggests a review of the powers 'must be conducted before the end of the period of five years beginning with the day on which the regulations come into force', Sir Steve said this would still be well into the next Parliament.
'As long as the sunset clause hasn't set, as it were, it is a power sitting there on day one. So a new government could come in, it doesn't need to consult, it doesn't need to draft legislation, and it doesn't need to spend nine months getting it through parliament. It's there and ready to run,' he said.
The Bill, published on Thursday, hands the Government powers to 'prescribe' investments in 'private equity', 'private debt', 'venture capital' and 'interests in land', which it continues to say are just 'examples' of asset classes.
The Government can also instruct whether those investments 'link an asset to economic activity in the United Kingdom' or even more directly are 'located in the United Kingdom'.
Richard Tice, the deputy leader of Reform, has repeatedly said he will scrap 'net stupid zero' policies if the party forms the next government. Sir Steve said the party could use the Pensions Bill to partly reshape the investment landscape in the UK.
He said: 'The Government has just given themselves powers to tell pension schemes how to invest. And these powers appear to run for at least five years from the passing of the Bill. So Nigel Farage may get to use them, right?
'So just imagine we have a Reform government that's not big on woke. And they say: oh we've got an act of parliament that already allows us to tell pension schemes they can't invest in net zero.
'The Government giving itself power to tell schemes how to invest, is just a very, very bad precedent.'