Pension minister explains how sector can avoid mandation
Pensions minister Torsten Bell said he does not expect to have to use powers given to him by the pension schemes bill to force funds to invest in UK assets (Pensions UK)
Are you a British pension scheme who is having sleepless nights about the government’s plan to mandate investment in UK assets?
Well the UK pensions minister, Torsten Bell, has a message for you: “Chillax”.
Speaking at the Pensions UK conference in Manchester, Bell said he was confident the mandation element of the pension schemes bill which gives the government reserve powers to force pension schemes to invest in certain assets would not need to be used.
Bell said the problem the British government was confronting was one of “collective action”.
That is to say, pension schemes may avoid making moves individually to invest greater amounts in UK private assets because they know that one of their competitors could undercut them on cost by not doing so.
A problem which does not exist if the pension sector moves as a herd.
But Bell said he was confident this would be achieved without the government having to force pension schemes to act.
He said: “The industry is saying it wants to change, and it is doing that because it is in members’ best interests to invest in a wider range of assets.
“I would just encourage the industry to do what it says it is happy to do.
“The reserve power [...] won’t need to be used in my view.”
Bell said the mandation power was “not a permanent state of affairs”. It is aimed at delivering the Mansion House agreement.
He said: “The industry has committed to doing that which is why I’m not going to use it.”
Bell added that the pensions industry “should all just chillax” about the mandation power.
