Pensions minister says gov’t WON’T tell pension firms how to invest if it’s not in members’ interests

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The pensions minister, Torsten Bell, has insisted that the government will NOT force pension companies that signed its Mansion House Accord to invest in a certain way if it’s not in their customer’s best interests.

Speaking at the Pensions UK annual conference in Manchester, attended by Investing Insiders, Mr Bell said everyone needs to “chillax” about his government’s reserved power to mandate that pension schemes must invest in a certain way, insisting that it “won’t need to be used”.

What’s going on? In a piece of legislation called the Pension Schemes Bill, the government has given itself a power to force pension schemes (who signed Mansion House) to invest at least 10 per cent into private markets – and 5 per cent into UK assets – by 2030, if they don’t do so of their own accord.

Experts say it’s wrong for the government to dictate how pension schemes invest, as that should be up to trustees – people who run pension schemes.

But Mr Bell insisted that firms will be able to argue this if the power is ever used, and that the power only exists to nudge the industry to follow through on its promises.

He said: “The reserve power, actually – even if it was used, and it won’t need to be used, in my view – is just saying: comply with the thing the industry has said it wants to do.

“But even if the power is used, you can just explain that you don’t need to comply because it’s not in your member’s best interests to do so, and that is what’s in the reserve power.

“I basically feel like it’s a slight distraction, as ‘comply or explain’ is what’s in the bill, so I feel like we should all just chillax.”