Pension Schemes Bill

Lord Remnant Excerpts

Consideration of Commons amendments and / or reasons
Monday 20th April 2026 Lords Chamber

[Baroness Altmann (Non-Afl)]

My Lords, I agree with every word that the noble Lord, Lord Vaux, has just said. I declare my interests as a non-executive director of a pension administration company and a board adviser to a master trust. I support all the amendments in this group, but I shall speak particularly to Motion E1 so ably moved by the noble Baroness, Lady Bowles.

A fiduciary obligation is one of the highest standards of duty in common law, yet this Bill would override the best judgment of trustees. Although the 5% and 10% amendment laid by the Government is welcome, it does not deal with issues such as those outlined by the noble Baroness, Lady Bowles, and the noble Lord, Lord Vaux. If trustees do not believe that the case for, for example, private assets is strong enough, they will still have to buy them or they will not be able to participate in auto-enrolment. This is not incentivisation. Incentivising financially, perhaps via tax reliefs, would change the calculation of the potential outcomes, but mandation does not do that.

The dangers of mistiming are clear. A McKinsey study published in February shows that, for example, private equity is under structural strain with constrained liquidity, valuation uncertainty and returns that have been weaker. As the noble Lord, Lord Vaux, outlined, the same applies to private credit, particularly that held in open-ended fund structures. In infrastructure, we have recently seen the returns offered for solar power degraded from in line with RPI to in line with CPI, which has put international investors off some of the infrastructure opportunities in the UK.

If the Government persist in their idea that closed-end funds, which are much more appropriate and have their own diversified, expertly managed portfolios of qualifying assets cannot qualify, that simply further reinforces the idea that the Government does not know best and that it is not safe for this House to authorise the Government to mandate these investments. Not all pension funds have the in-house capability to manage alternative or illiquid assets. Just being large does not give them instant expertise. Australian and Canadian funds have taken decades to build up this kind of ability. A strict time limit simply does not and cannot fit with the requirements that the Government seek to impose on pension schemes. I hope that noble Lords will stand firm in the resolve to send this back to the other place.

[Lord Remnant (Con)]

My Lords, this is probably the final time that noble Lords will have the dubious pleasure of hearing from me, and I assure the House that I will be brief. I wholeheartedly support Motion E1 in the name of the noble Baroness, Lady Bowles, and all the remarks that have been very supportive of that that noble Lords have made to date for the reason that she has so eloquently expressed. I also very much support her remarks about the unwarranted discrimination in this Bill against investment companies. Suffice it to say that a provision that is wrong in principle is not rectified or remedied by restricting the width of its application in the Government’s amendment.

I would like to venture just one additional observation. As we have heard, the Mansion House Accord is a voluntary agreement specifically targeted at UK assets to drive growth and improve returns. It aims to improve financial outcomes for savers while supporting UK economic growth, one of the Government’s core objectives. It is necessarily a voluntary initiative expressly subject to fiduciary duty and consumer duty, and it is dependent on implementation by the Government and regulators of critical enablers. Yet here is the rub: had the industry’s best intentions towards investing in private markets not been formalised in this way, there would be nothing for us to discuss here today. There would be nothing for this reserve power to backstop, so it would be redundant. Given the Government’s expressed intention never to use a reserve power, they would hardly be putting forward a primary power to compel institutions to invest moneys in ways in which they—the Government—see fit. At the time of the signing of the Mansion House Accord, there was no indication that the agreement would be anything other than voluntary and that the Government were proposing to take the powers of compulsion now proposed. I believe that the signatories entered into this accord with the best of intentions and with every expectation of meeting their commitments, and I believe that they will do so, but there is no certainty that they will not be blown off course, whether through scarcity of available opportunities or otherwise.

Should that happen, this or any future Government could undoubtedly consider the use of the reserve power that the Bill grants them. There is every reason to believe that the industry’s perhaps justifiable reasons for falling short would not find favour with the Government, and that the interpretation of the caveats built into a voluntary accord in terms of fiduciary duty, consumer duty and regulatory and governmental enablers would be disputed and the caveats overridden. All in all, it would be a mess, and City institutions would rue the day they had tried to be helpful towards the Government in playing their part in meeting their growth objectives.