Debated in the House of Commons on 7 July, the Pension Schemes Bill includes a contentious clause that would allow ministers to compel pension schemes to invest in UK-focused assets, such as infrastructure and private markets.
Although described by the Government as a “backstop” unlikely to be used, the measure is widely viewed as a way to pressure schemes into meeting voluntary investment goals.
Under the Mansion House Accord, 17 providers have already pledged to allocate 10% of their assets to private markets, with at least 5% directed toward UK investments.
Speaking to the Press Association, Bank of England governor Andrew Bailey acknowledged the need for greater pension fund investment in the economy but opposed mandating asset allocation.
“Structural reform in the pensions sector is welcome,” he said. “But mandating investment is not appropriate. Reform requires effort, but it should happen naturally.”
Steve Webb, partner at LCP and former pensions minister, said Bailey’s remarks pose a serious challenge to the Government’s approach.
