Latest news with #pensionfirms
Daily Mail
05-06-2025
- Business
- Daily Mail
'Bigger pension pots for Britons': Chancellor says reforms will boost economic growth - here's how
A new Pension Schemes Bill aimed at boosting individual people's pensions and economic growth is being launched by the Government today. The measures include a clampdown on schemes offering poor value for money to savers, creating 'mega' pension funds which can make better investment returns, and merging tiny pots. The Bill will also make pension schemes offer people reaching retirement age clear 'default' options to turn their fund into an income to live on in old age. The Government says millions of people planning retirement will find it easier to manage and get more from their pension pots as a result of its changes. And it will tackle schemes delivering poor returns for savers with a range of reforms, including a new system to show how well they are performing, and forcing them to merge if they are falling short. The Government recently announced that small pension pots worth £1,000 or less could be automatically moved into government-approved 'consolidator' schemes. Meanwhile, in its Mansion House Accord, 17 pension firms voluntarily pledged to put 10 per cent of the funds they manage for savers into UK-based unlisted private businesses and infrastructure projects by 2030. The Government has held off from forcing pension fund managers to invest more in the UK in the new Bill, but not taken this off the table for the future. The Bill also includes: - Creating multi-employer defined contribution pension 'megafunds' of at least £25 billion, so that 'bigger and better' schemes can drive down costs and invest in a wider range of assets. - Consolidating and professionalising the Local Government Pension Scheme, with assets merged into six 'pools' that can invest in infrastructure, housing and clean energy. - Allowing defined benefit (final salary) pension schemes to release surpluses totalling £160billion to support employers' investment plans and benefit scheme members. Chancellor Rachel Reeves says: 'The Bill is a game changer, delivering bigger pension pots for savers and driving £50billion of investment directly into the UK economy– putting more money into people's pockets through the Plan for Change.' Work and Pensions Secretary Liz Kendall says: 'Hardworking people across the UK deserve their pensions to work as hard for them as they have worked to save, and our reforms will deliver a huge boost to future generations of pensioners. 'The Bill is about securing better value for savers' pensions and driving long-term investment in British businesses to boost economic growth in our country.' Former Pensions Minister Steve Webb, a partner at pension consultancy LCP, says: 'Whilst there are many worthy measures in the Bill, the biggest omission is action to get more money flowing into pensions. 'The Government's own projections show that more than 12 million people are not saving enough for retirement and yet the first major pensions legislation of the new Parliament does nothing to address this 'elephant in the room'.' Webb, who is This is Money's retirement columnist, adds: 'The very fact that the adequacy of pension saving is not going to be considered until the second phase of the government's pensions review shows that this issue is unfortunately on the back burner. 'Measures such as consolidating tiny pension pots are helpful tidying up measures, but do nothing to tackle the fundamental problem that millions of us simply do not have enough money set aside for our retirement. 'With every passing year that this issue goes unaddressed, time is running out for people already well through their working life to have the chance for a decent retirement.' Yvonne Braun, director of policy for long term savings at pension industry body the Association of British Insurers, says: 'This wide-ranging Bill is set to usher in the most large-scale pension reforms since auto-enrolment. 'The details will be crucial and we will scrutinise the Bill to ensure it puts the interests of savers first. 'We also urgently need to tackle the level of pension contributions which are too low to create an adequate retirement income for many. We urge government to set out the details of its adequacy review as soon as possible.'
Telegraph
14-05-2025
- Business
- Telegraph
Rachel Reeves has a dangerous sense of entitlement to your wealth
The Chancellor has now made it perfectly clear: your savings are not yours to do with what you like. Rachel Reeves this week threatened to force firms to invest a portion of their pension cash in Britain if they did not agree to follow her rules. She is also poised to finally announce a review into the future of Britain's Individual Saving Account (Isa) regime. Among the ideas she is considering is slashing the cash Isa limit down from £20,000 to £4,000 to encourage more savers to invest. The justification for both of these acts of needless meddling will be both to boost growth in Britain and also improve outcomes for savers. The problem is neither of these are guaranteed and leaving it all well alone is likely to be a much smarter idea. There can now be no doubt that Reeves is a Chancellor who believes that she can help herself to your money to gamble on growth. It wouldn't be so galling if she had not already launched a death duty raid on our pensions and triggered an economic crisis with her jobs tax. To suggest that private companies could be forced to invest how the Government sees fit is a disgrace. However, the real fear is that this is simply the thin end of the wedge. Former pensions minister Baroness Altmann has already suggested that pension savers should lose tax relief if they do not back Britain. Reeves's pensions plot has already seen 17 major pension firms sign up to invest at least 10pc of assets in private markets, including half of that in British companies. Yet the Government's own actuaries have advised her that this will have little or no impact, and the fees involved could wipe out any gains for individual savers. None of this should be mandated, we should want to invest in Britain because it is an attractive thing to do, not because we are forced to. Besides, there are plenty of other options available. Reeves could abolish stamp duty on investments by Britain's pension funds, or she could reinstate the tax relief Gordon Brown took away in 1997. If Reeves is allowed to get away with this, there is no end to what powers Governments might exploit to get our money working harder for them and not us. The victims will be those who are not engaged with their pensions. More astute savers will move their money out of so-called 'default' funds to make it work harder elsewhere. And of course, one of the reasons why Britain is not an attractive place to invest is the heavy tax burden, partly enforced by Reeves, that is stifling growth. The Chancellor is also poised to announce a second act of reckless interference – a shake-up of valuable tax-free Isas. Now, if she were a progressive chancellor, Reeves would increase the annual allowances to catch up with inflation, or perhaps abolish inheritance tax on Isa savings. But relaxing taxes to boost growth is not something she understands. This is a Chancellor who once said that the one thing she would change about the tax system was slashing pension tax relief for high earners. These tax incentives exist to encourage people to save so they are not reliant on the state later in life. Reducing the benefits of saving into cash Isas will only punish those who prudently save for their future. The only winners will be fund management firms in the City who will help themselves to more of your money through charges levied on stocks and shares investments. Reeves wants you to invest for what is best for Labour's Britain, rather than you. She has no right to dictate how we invest our money, it should be none of her business. Labour is building the ultimate nanny state – a Government that doesn't trust you to do what is best for you. Above all, our pensions and savings are not playthings for a desperate Chancellor scrambling for growth.
