Jeremy Hunt 'backs British business' as he announces pension changes
Budget tax cut will be 'wiped out by increases in Council Tax', claims Labour
Pension savers are set to benefit from new reforms being introduced by the Government ahead of next week’s Budget.
Chancellor Jeremy Hunt has announced an overhaul of the pension fund systems in a bid to bolster British business and returns for those with retirement savings.
Among the changes are requirements for Defined Contribution (DC) pension funds to publicly disclose how much they invest in the UK.
According to the Treasury, this will allow employers and savers to compare pension schemes and make a better informed choice.
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New pension fund reforms are expected to benefit savers
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As part of the Value for Money (VFM) pension fund reforms, there will be greater consolidation within the DC pension market and improved outcomes for savers.
Under the Government’s auto enrolment rollout, the amount of investment entering UK pension funds has jumped £90billion in 2012 to around £116billion in 2022.
Despite this, existing disclosure requirements for DC pension funds are not consistent across the market and do not demand a breakdown of UK investments.
As such, it is sometimes difficult for policymakers and savers to understand where this money is being invested.
With these reforms, DC pension funds will have to disclose investment levels in British businesses by 2027, including their costs and net investment returns.
Furthermore, pension funds will need to publicly compare their performance data against rival schemes, including at least two schemes managing at least £10billion in assets.
Any pension funds which are performing poorly for savers will not be permitted to take on new business from employers.
On top of this, The Pensions Regulator (TPR) and Financial Conduct Authority (FCA) are set to be awarded with new intervention powers.
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Jeremy Hunt will deliver his Budget next week GB NEWSMr Hunt said: “We have already started on a path to drive growth, unlock capital for our most promising companies and improve outcomes for savers – and these new rules mean employers and savers can see how their money is invested and how the returns compare to other schemes.
“British pension funds appear to contribute less to the UK economy than international counterparts do as they invest less in our domestic businesses. These requirements will help focus minds on how to improve overall returns and outcomes for savers.”
Mel Stride MP, Secretary of State for Work and Pensions, added: “The incredible success of automatic enrolment has opened up a huge opportunity to grow the economy, boost British businesses and fuel our futures. It has helped us transform the pensions landscape over the last decade.
“And our Value for Money framework will take this one step further, focusing pension managers on their number one priority – securing the best possible returns for savers – as well as providing a boost to the wider economy.”