Open call for evidence: Pensions Investment Review: Call for Evidence
The Chancellor has launched a landmark pensions review to boost
investment, increase saver returns and tackle waste in the pensions
system. The Chancellor has appointed the Minister for Pensions to lead
the review. The review will focus on defined contribution workplace
schemes and the Local Government Pension Scheme.
In its
initial stages the review will be considering evidence on a range of
questions including those listed below. These will guide our
stakeholder engagement with more targeted questions being considered
with particular stakeholder groups.
The review intends to
engage extensively with stakeholders via meetings and workshops but
would also welcome written submissions through the survey link
provided from relevant organisations and individuals on these topics.
We also invite stakeholders with existing data or unpublished
analysis or reports relevant to the questions below to consider
sharing these with the review.
Asset pooling policy in the
Local Government Pension Scheme in England & Wales (LGPS) was
consulted on in 2023[1]. In addition to the below request for
evidence, the review will engage extensively on next steps with regard
to LGPS consolidation, with funds, pools and representative groups
including the LGA and trade unions. With regard to investing in the
UK, the questions set out below are applied to both DC and LGPS funds,
and where relevant stakeholders should feel free to make submissions
focused solely on the LGPS or solely on DC. Apart from the LGPS, the
rest of the DB market is out of scope of this review. Scale and
consolidation
What are the potential advantages, and any risks,
for UK pension savers and UK economic growth from a more consolidated
future DC market consisting of a higher concentration of savers and
assets in schemes or providers with scale?
What should the role
of Single Employer Trusts be in a more consolidated future DC
market?
What should the relative role of master trusts and GPPs
be in the future pensions landscape? How do the roles and
responsibilities of trustees and IGCs compare? Which players in a
market with more scale are more likely to adopt new investment
strategies that include exposure to UK productive assets? Are master
trusts (with a fiduciary duty to their members) or GPPs more likely to
pursue diversified portfolios and deliver both higher investment in UK
productive finance assets and better saver outcomes?
What are
the barriers to commercial or regulation-driven consolidation in the
DC market, including competitive and legal factors?
To what
extent has LGPS asset pooling been successful, including specific
models of pooling, with respect to delivering improved long-term risk-
adjusted returns and capacity to invest in a wider range of asset
classes?
Costs vs Value
What are the respective roles
and relative influence of employers, advisers, trustees/IGCs and
pension providers in setting costs in the workplace DC market, and the
impact of intense price competition on asset allocation?
Is
there a case for Government interventions, aimed at employers or other
participants in the market, designed to encourage pension schemes to
increase their investment budgets in order to seek higher investment
returns from a wider range of asset classes?
Investing in the
UK
What is the potential for a more consolidated LGPS and
workplace DC market, combined with an increased focus on net
investment returns (rather than costs), to increase net investment in
UK asset classes such as unlisted and listed equity and
infrastructure, and the potential impacts of such an increase on UK
growth?
What are the main factors behind changing patterns of
UK pension fund investment in UK asset classes (including UK-listed
equities), such as past and predicted asset price performance and cost
factors?
Is there a case for establishing additional incentives
or requirements aimed at raising the portfolio allocations of DC and
LGPS funds to UK assets or particular UK asset classes, taking into
account the priorities of the review to improve saver outcomes and
boost UK growth? In addition, for the LGPS, there are options to
support and incentivise investment in local communities contributing
to local and regional growth. What are the options for those
incentives and requirements and what are their relative merits and
predicted effectiveness?
[1] https://www. gov.
uk/government/consultations/local-government-pension-scheme-england-
and-wales-next-steps-on-investments/local-government-pension-scheme-
england-and-wales-next-steps-on-investments
Please provide
your response to this call for evidence at the following survey link.
Answers are limited to 500 words per question.
Existing data
or unpublished analysis may be submitted to pensions.
review@hmtreasury. gov. uk