Latest news with #MansionHouseAccord
The Herald Scotland
2 days ago
- Business
- The Herald Scotland
Uncertainty for savers as Rachel Reeves eyes ISA changes
Recent months have seen intense debate about potential ISA reforms, particularly following Reeves' Spring Statement in March, where she expressed a desire to 'get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission'. The prospect of slashing the cash ISA allowance from £20,000 to as low as £4,000 has sparked alarm, with fears it could penalise cautious savers. On 20 May, the Chancellor confirmed to the BBC that the overall £20,000 ISA allowance would remain intact. Yet, her silence on the specific cash ISA limit within the overall allowance has kept speculation alive, with a potential cut remaining on the table as part of a broader review expected to be launched in July's Mansion House speech. The rationale behind potential reforms is partly rooted in a desire to channel more capital into UK markets. Reeves has been vocal about revitalising the London Stock Exchange, noting that 'hundreds of billions of pounds in cash ISAs' are not being invested productively. This echoes the recent Mansion House Accord, an agreement with the UK's largest workplace pension scheme providers to allocate at least 5% of their default funds to UK private market assets by 2030, which could be followed by further measures aimed at supporting UK public markets too. By potentially nudging cash savers towards stocks and shares ISAs, the government may also hope to address the UK stock market's challenges, including a decline in initial public offerings (IPOs), companies relocating listings overseas where they can command higher valuations and private equity buyouts, factors which have led to a 20% decline in the number of UK listed companies over the last five years. One proposed reform, floated by investment bank Peel Hunt, involves simplifying the ISA system by merging cash and stocks and shares ISAs into a single product and abolishing lifetime ISAs and innovative finance ISAs. Peel Hunt argues that with ISA tax reliefs costing the Treasury an estimated £9.4 billion annually, redirecting these incentives towards UK-focused investments could deliver better value for taxpayers. While such a move would align with Reeves' growth agenda, it would severely limit investor flexibility. From a public policy perspective and for the brokers and fund managers who make a living off the UK markets, the case for refocusing ISAs on UK assets may seem compelling. The UK stock market has struggled as pension funds have dramatically reduced their UK equity holdings since the late 1990s, and retail investors have increasingly favoured US equities. However, from the perspective of ISA investors, such restrictions would be a step backward to the old days of personal equity plans, which had such limitations on overseas investments before they were replaced by ISAs. Limiting stocks and shares ISAs to UK assets – or requiring a minimum level of UK exposure - would reduce the scope for diversification, a cornerstone of sensible investing. Historically, overseas markets —notably US equities — have often outperformed UK equities over long periods. Forcing investors to prioritise UK stocks could undermine the very returns Reeves seeks to enhance. A potential beneficiary of a UK-focused ISA regime could be the investment trust sector, which has faced headwinds recently with trusts trading at wide discounts, limited new share issuance and the arrival of activists on the scene. UK-listed investment trusts that invest globally, many of which are managed in Edinburgh, might attract fresh demand if investors are required to allocate a portion of their ISA to UK-listed assets. Such trusts could offer a workaround, allowing exposure to international markets while supporting the UK financial services sector, a significant tax revenue generator and employer in both London and Edinburgh. An alternative to mandating UK investment in ISAs could be through incentives or the removal of impediments, such as scrapping stamp duty on UK share purchases within ISAs, which undermines the 'tax-free' promise and is a disadvantage over buying US shares where no such transaction tax exists. An even bolder idea would be a modest income tax credit or top-up 'bonus' for stocks and shares ISA subscriptions, subject to a minimum holding period to prevent short-term trading. This could incentivise equity investment while preserving saver choice. As we await the launch of the consultation and its outcome, likely to be detailed in the Autumn Budget, savers and investors would be wise to make use of the current allowances while they can, especially given the high tax burden. The £20,000 ISA allowance is safe for now, but changes to cash ISAs or restrictions on stocks and shares ISAs could reshape how we save and invest in the future. The Chancellor's desire to boost UK investment is laudable, but it must not come at the expense of savers' flexibility or financial security. Jason Hollands is a managing director at wealth management firm Evelyn Partners which has offices in Glasgow, Edinburgh, and Aberdeen
Yahoo
3 days ago
- Business
- Yahoo
Will Labour's pension changes actually save you an extra £6,000?
The government says millions of workers could get a £6,000 boost to their retirement fund as a result of wide-ranging pensions reforms. On Thursday, Rachel Reeves revealed more details of the Pension Schemes Bill, which will pave the way for the creation of more so-called "megafunds" managing at least £25 billion in assets within the next five years. Earlier this month, 17 major workplace pension providers signed a voluntary agreement called the Mansion House Accord, with a view to boosting pension returns. Aviva and Legal & General are among the providers who have committed to invest at least 10% of their workplace pension portfolios in assets like UK infrastructure, property and private equity by 2030. The government says the agreement will be good news for those who have defined contribution (DC) pensions - the most common type of private pension in the UK. Here's what the reform means in real terms — and how likely it is that savers will gain a £6,000 pension boost. A defined contribution (DC) pension is a type of pension scheme where you (and if it's a workplace pension, your employer) contribute money into a personal pension pot. The money you and your employer contribute is invested by your pension provider. The value of your pension at retirement depends on how much has been paid in and how well the investments perform. Pension providers typically invest in a mix of assets, including stocks and shares (also known as equities), government and corporate bonds, property, and commodities, like gold and cash. This mix is chosen to balance risk and reward, meaning that your pension will benefit from long-term growth while also managing potential losses. Labour says the changes will benefit defined contribution (DC) pension savers by harnessing higher potential net returns available in private markets. According to the government, the signatories to the accord have said that £252 billion of assets are subject to the pledge. Helen Morrissey, the head of retirement analysis at financial services company Hargreaves Lansdown, said that while "there needs to be an element of flexibility" around the £6,000 uplift, the "increased efficiency" of the reforms looks like a positive step to boost defined contribution members' pots. She told Yahoo News: 'Markets can go up and down and this can have an impact on a member's pot. "However, these reforms look to enable schemes to invest in asset classes that were previously closed to them and there is potential for increased returns as a result. "The key to this will be access to a stream of high-quality opportunities and the government has committed to helping schemes deal with barriers that have previously stood in their way. "Increased efficiency will also help boost member pots. One of the key benefits of scale is that it enables schemes to drive down costs and the impact assessment shows this can have a material impact on the size of pension," she added. It is a combination of these increased efficiencies that will reduce pension fees, as well as the higher returns that the government has used to calculate the £6,000 figure. However, Sir Steve Webb, a former pensions minister, cautioned that the sum was "marginal at best", telling the inews that savers would need to start paying into their pensions from the age of 22 and never miss a year until retirement to potentially secure the maximum amount. When factored into the total size of the average retirement pot and how long they are used for Sir Steve said it is probably worth under £10 a week on your final pension. He added: "None of this factors in the costs of some of the other measures which they are proposing, which include creating a new process for the consolidation of micro pots, which will cost a lot of money to administer, and which will presumably increase pension costs." "They're clearly aiming to provide a 'retail' message to go alongside all this talk of multi-billion-pound pension schemes, but to be honest, this £6,000 figure is marginal at best.' The reforms enable pension funds to invest in major infrastructure projects and private businesses, which historically have delivered higher returns. The plan covers retirement savings for the majority of UK workers in two ways. Firstly, there are the 86 different local authority pension schemes, which provide for more than six million people in their retirement, the majority low-paid women. The £392bn in these schemes will be merged from eight pools to six asset pools by next March, reducing overheads and maximising returns. Local investment targets will also be agreed for local authority pension schemes for the first time, the Treasury said. Secondly, defined contribution schemes currently worth £800bn, covering millions of other private and public sector workers across the country, will also be consolidated. This will reduce management fees and operational costs, and boost savings for savers. Because of this, by 2030, the government says there should be more than 20 pension funds worth more than £25bn, in contrast to the current 10 available. While the move was agreed earlier this month, the government has now introduced a legislative back-stop, which will allow it to push through the new rules if insufficient progress is made by the end of the decade, according to the BBC. The 17 providers who have signed up are: Aegon UK, Aon, Aviva, Legal & General, LifeSight, M&G, Mercer, NatWest Cushon, Nest, now:pensions, Phoenix Group, Royal London, Smart Pension, the People's Pension, SEI, TPT Retirement Solutions and the Universities Superannuation Scheme (USS). The Pension Schemes Bill is due to be heard during this term of Parliament.
Yahoo
3 days ago
- Business
- Yahoo
Government 'megafund' pension plans could give £6k boost to savers
Plans to double the number of UK pension "megafunds" by 2030 could see workers get a £6,000 boost to their retirement pot, the government has said. The UK Treasury confirmed plans on Thursday to expand the number of UK pension megafunds in the next five years. Under reforms set to be introduced through the Pension Schemes Bill, the government said that multi-employer defined contribution and local government schemes will pool to operate at megafund level, managing at least £25bn in assets by 2030. The Treasury said that evidence from Australia and Canada showed that this size enabled pension funds to invest in large infrastructure businesses and private businesses, both boosting the economy and potentially driving higher returns for savers. The government said that this would help drive more than £50bn in investment for UK infrastructure, new homes and fast-growing businesses. This comes on the back of the government's recent announcement of a new agreement, known as the Mansion House Accord, in which Britain's biggest pension funds committed to invest 5% of assets in the UK. On Thursday, the government also published the final report from its Pensions Investment Review, setting out its final policy decisions following on from feedback provided to its consultation. It said that figures from the report showed that these reforms would drive higher returns for savers, "in part by cutting waste in the system". Read more: Trending tickers: Nvidia, Salesforce, HP, Tesla and M&S According to the Treasury, these schemes could be saving £1bn a year by 2030 through economies of scale and improved investment strategies. As a result, the government said average earner who saves over their career could see a £6,000 boost to their defined contribution pension pot. That's based on its estimate that this megafund consolidation could deliver at least a six-basis-point reduction in fees, as well as an increase in allocations to "productive" assets such infrastructure projects. "We're making pensions work for Britain," said chancellor Rachel Reeves. "These reforms mean better returns for workers and billions more invested in clean energy and high-growth businesses — the Plan for Change in action." Meanwhile, deputy prime minister Angela Rayner said that the "untapped potential of the £392bn Local Government Pension Scheme is enormous. Through these reforms we will make sure it drives growth and opportunities in communities across the country for years to come" In Thursday's announcement, the Treasury also said that a "backstop power [is] set to be taken in the Pension Schemes Bill to protect the interests of LGPS [local government pension scheme] members and local taxpayers where necessary by directing an administering authority to participate in a specific investment pool." According to a Financial Times report, officials confirmed that this could include specific targets to UK assets. A spokesperson for the Treasury had not responded to Yahoo Finance UK's request for comment at the time of writing. Matt Tickle, chief investment officer at Barnett Waddingham, said: "The main concern for schemes following the government's wide ranging pension announcements is the looming threat of 'mandation'. "While the chancellor's 'backstop' power – which could compel funds to back British assets – appears to have deterred that threat for now, any move towards mandated investment is a blunt tool, leaving members and society as a whole at risk of poorer outcomes." "That said, the fact that there is time gives some of the government's better policies, around planning reform, value for money and retirement pathways more space to succeed," he added. "If they do, they could generate opportunities that pension schemes will willingly invest in. Efforts to improve the flow of investable opportunities are certainly positive, however there is still an urgent need to focus on reforms rather than enforcing mandates." Helen Morrissey, Yahoo Finance UK columnist and head of retirement analysis at Hargreaves Lansdown, said: "While scale is important in delivering better outcomes for savers, it must not come at the cost of reducing competition, member choice and much needed innovation. This has the ability to really drive up member engagement with their pensions, improve decision making and boost outcomes." "It's important to pick through the detail of the report and later regulation to see how this is supported," she said. "For instance, detail needs to be fleshed out on how the transition pathway for providers looking to reach scale by 2035 will work. "If the market is to thrive, then there needs to be space for smaller, innovative providers. It's a lesson learned in the retail banking market where competition from smaller challenger banks has put pressure on larger incumbents to improve user experience and product offerings." Read more: Odds of more Bank of England interest rate cuts fall as food inflation rises UK 'bargain' stocks that have outperformed the market long-term Trump tariffs to hit UK economy next year, says IMF
Yahoo
4 days ago
- Business
- Yahoo
Government 'megafund' pension plans could give £6k boost to savers
Plans to double the number of UK pension "megafunds" by 2030 could see workers get a £6,000 boost to their retirement pot, the government has said. The UK Treasury confirmed plans on Thursday to expand the number of UK pension megafunds in the next five years. Under reforms set to be introduced through the Pension Schemes Bill, the government said that multi-employer defined contribution and local government schemes will pool to operate at megafund level, managing at least £25bn in assets by 2030. The Treasury said that evidence from Australia and Canada showed that this size enabled pension funds to invest in large infrastructure businesses and private businesses, both boosting the economy and potentially driving higher returns for savers. The government said that this would help drive more than £50bn in investment for UK infrastructure, new homes and fast-growing businesses. This comes on the back of the government's recent announcement of a new agreement, known as the Mansion House Accord, in which Britain's biggest pension funds committed to invest 5% of assets in the UK. On Thursday, the government also published the final report from its Pensions Investment Review, setting out its final policy decisions following on from feedback provided to its consultation. It said that figures from the report showed that these reforms would drive higher returns for savers, "in part by cutting waste in the system". Read more: Trending tickers: Nvidia, Salesforce, HP, Tesla and M&S According to the Treasury, these schemes could be saving £1bn a year by 2030 through economies of scale and improved investment strategies. As a result, the government said average earner who saves over their career could see a £6,000 boost to their defined contribution pension pot. That's based on its estimate that this megafund consolidation could deliver at least a six-basis-point reduction in fees, as well as an increase in allocations to "productive" assets such infrastructure projects. "We're making pensions work for Britain," said chancellor Rachel Reeves. "These reforms mean better returns for workers and billions more invested in clean energy and high-growth businesses — the Plan for Change in action." Meanwhile, deputy prime minister Angela Rayner said that the "untapped potential of the £392bn Local Government Pension Scheme is enormous. Through these reforms we will make sure it drives growth and opportunities in communities across the country for years to come" In Thursday's announcement, the Treasury also said that a "backstop power [is] set to be taken in the Pension Schemes Bill to protect the interests of LGPS [local government pension scheme] members and local taxpayers where necessary by directing an administering authority to participate in a specific investment pool." According to a Financial Times report, officials confirmed that this could include specific targets to UK assets. A spokesperson for the Treasury had not responded to Yahoo Finance UK's request for comment at the time of writing. Matt Tickle, chief investment officer at Barnett Waddingham, said: "The main concern for schemes following the government's wide ranging pension announcements is the looming threat of 'mandation'. "While the chancellor's 'backstop' power – which could compel funds to back British assets – appears to have deterred that threat for now, any move towards mandated investment is a blunt tool, leaving members and society as a whole at risk of poorer outcomes." "That said, the fact that there is time gives some of the government's better policies, around planning reform, value for money and retirement pathways more space to succeed," he added. "If they do, they could generate opportunities that pension schemes will willingly invest in. Efforts to improve the flow of investable opportunities are certainly positive, however there is still an urgent need to focus on reforms rather than enforcing mandates." Helen Morrissey, Yahoo Finance UK columnist and head of retirement analysis at Hargreaves Lansdown, said: "While scale is important in delivering better outcomes for savers, it must not come at the cost of reducing competition, member choice and much needed innovation. This has the ability to really drive up member engagement with their pensions, improve decision making and boost outcomes." "It's important to pick through the detail of the report and later regulation to see how this is supported," she said. "For instance, detail needs to be fleshed out on how the transition pathway for providers looking to reach scale by 2035 will work. "If the market is to thrive, then there needs to be space for smaller, innovative providers. It's a lesson learned in the retail banking market where competition from smaller challenger banks has put pressure on larger incumbents to improve user experience and product offerings." Read more: Odds of more Bank of England interest rate cuts fall as food inflation rises UK 'bargain' stocks that have outperformed the market long-term Trump tariffs to hit UK economy next year, says IMF
Qatar Tribune
26-05-2025
- Business
- Qatar Tribune
Qatar, London eye deeper investment relations as lord mayor visits Doha
Tribune News Network Doha The Qatari Businessmen Association (QBA) hosted Lord Alastair King, Lord Mayor of the City of London, and his accompanying delegation for a luncheon held on the sidelines of his visit to Doha. The event was attended by His Excellency Neerav Patel, the British Ambassador to the State of Qatar, and was welcomed by Sheikh Faisal bin Qassim Al Thani, QBA Chairman. Also the luncheon was attended by Sheikh Nawaf Nasser bin Khaled Al Thani, QBA Board member, along with QBA members: Khalid Al Mannai, Sheikh Mansour bin Jassim Al Thani, Nabil Abu Issa, Youssef Jassim Al Darwish, Sheikh Turki bin Faisal, Faisal Al Mana, Abdulrahman Al Darwish, Youssef Al Mahmoud, Mohammed Althaf, and Sarah Abdallah, QBA Deputy General Manager. Lord Alastair King praised the visit of His Highness Sheikh Tamim bin Hamad Al Thani, the Amir of the State of Qatar, to the United Kingdom last December, describing it as a celebration of the strong commercial, financial, and cultural ties between the two nations. Lord King emphasized that the United Kingdom views Qatar as a key investment partner and expressed gratitude for Qatar's trust, as demonstrated through its substantial investments across various British institutions and businesses. He noted that these investments extend beyond London to several parts of the UK, including South East England, where numerous investment opportunities are available. During the meeting, Lord King discussed a new joint initiative — the Mansion House Accord — launched by the Pensions and Lifetime Savings Association (PLSA), the Association of British Insurers (ABI), and the City of London Corporation. The initiative involves commitment by 17 pension schemes and providers to allocate at least 10% of default Defined Contribution (DC) funds to private markets, with no less than half of these investments directed toward UK assets by 2030. According to the UK Treasury, the agreement is expected to mobilize over £50 billion in the next five years, including £25 billion for UK-based investments. He also highlighted efforts to encourage UK businesses to explore and expand into new markets like Qatar, stressing Britain's expertise in sustainable finance and project financing. He expressed interest in engaging Qatari investors in some of the UK's cutting-edge technological sectors. He added, 'London and Doha share a very close relationship. Several Qatari banks and institutions operate actively in London, engaging in significant business activities. It's equally promising to see British banks well represented in Qatar, while Qatari capital is also being invested in other British financial institutions, some of which are present in Qatar and attracting British investments.' He also touched on the UK's trade relations with the Gulf Cooperation Council (GCC), stating that projections suggest bilateral trade will grow by 16%, reaching nearly £57 billion. He emphasized the exceptional opportunities that exist between the UK and Qatar. 'There are many investments coming from Qatar related to green finance — an area where the UK considers itself a market leader,' he said. 'We currently manage £91 billion in green investment funds, and Qatar is participating in these funds.' Lord Alastair King invited members of the Qatari Businessmen Association to visit London to explore a wide range of investment opportunities across various sectors, assuring them that he would facilitate all investment-related processes for the Qatari business community within the City of London. For his part, Sheikh Faisal bin Qassim Al Thani, Chairman of the Qatari Businessmen Association, described London as a preferred investment destination for Qatari businessmen. He emphasized the historic and exceptional bilateral relationship between Doha and London, which has seen significant growth in economic and commercial ties in recent years. He confirmed that QBA members have diversified investments in the UK across sectors such as tourism, retail, construction, education, healthcare, and other productive industries. Neerav Patel, praised the strong and fruitful relationship between the UK Embassy and the QBA. He emphasized the UK's commitment to enhancing bilateral cooperation across all sectors, which he described as having reached their highest levels.
