Full Breakdown
Pensions UK Urges Government to Withdraw Mandation Power from Pension Schemes Bill
3/4/2026, 2:58:43 AM
Overview of the Mandation Power Controversy
Pensions UK is advocating for the withdrawal of reserve mandation powers from the Pension Schemes Bill, which would allow the government to dictate how pension schemes invest members' retirement savings. This call comes as the Bill progresses through Parliament, currently at the report stage, which is one of the last opportunities for amendments to be introduced.
Background on the Mansion House Accord
The reserve powers were introduced in response to the Mansion House Accord, a voluntary commitment made by 17 of the UK’s largest workplace pension providers. This Accord aims for these providers to invest at least 10% of their defined contribution (DC) default funds into private markets by 2030, with 5% allocated specifically to the UK. However, Pensions UK argues that the current wording of the Bill extends beyond the Accord's scope, potentially giving the government excessive control over investment decisions.
Key Concerns Raised by Pensions UK
Pensions UK has expressed that if the mandation power remains in the Bill, it could distort market competition and compromise saver outcomes. They emphasize that investment decisions should not be politically driven. The organization has proposed three critical safeguards:
1. A cap on the percentage of mandated investments, aligned with the Mansion House Accord targets.
2. Strengthening the reporting requirements before the mandation power can be enacted.
3. Reducing the duration of the sunset clause from 2035 to 2032 to mitigate political risks.
Julian Mund, Chief Executive of Pensions UK, stated, “Now is the time to drop the reserve mandation power from the Bill. Pensions UK strongly supports most of the provisions in the Bill, and wishes to see it passed. But the mandation power risks distorting the market, compromising saver outcomes, and eroding trust in the system.”
Industry Response and Criticism
The Association of British Insurers (ABI) has echoed Pensions UK's concerns, warning that the mandation clause poses significant political risks. Hannah Gurga, ABI's Director General, highlighted that the clause could allow future governments to shift investment priorities, which would be detrimental to long-term investment strategies. Gurga also criticized the lack of operational detail in the proposed "savers’ interest test," which is intended to prevent financial detriment to savers.
Legislative Timeline and Next Steps
The Pension Schemes Bill is set for further discussions in the House of Lords, with three sittings scheduled for March 16, 19, and 23. Following these discussions, the Bill will return to the House of Commons for final amendments before receiving Royal Assent. Pensions UK and ABI are actively lobbying for the proposed safeguards to be incorporated into the legislation to protect savers' interests.
Verbatim Quotes
- “Pensions UK chief executive Julian Mund says: “Now is the time to drop the reserve mandation power from the Bill.” — Julian Mund, Chief Executive of Pensions UK
- “The current drafting of the provision goes far beyond the scope of the Mansion House Accord and could be used to direct investment in very broad terms.” — Julian Mund, Chief Executive of Pensions UK
- “Decisions on how savers’ hard-earned money should be invested should not be a political choice.” — Pensions UK
In summary, Pensions UK is urging the government to reconsider the mandation powers in the Pension Schemes Bill, emphasizing the need for safeguards to ensure that investment decisions remain free from political influence.
