Pension Fund Reliefs

Baroness Drake Excerpts

Tuesday 4th February 2025 Lords Chamber

[Lord Livermore (Lab)]

I am very grateful to the noble Baroness for her question. I take this opportunity to recognise her career-long commitment to improving outcomes for savers and investors. The announcements the Chancellor made at the Mansion House on the pensions review could unlock billions of pounds of additional investment, but of course, as the noble Baroness rightly said, it is not in any way guaranteed that this investment will take place in the domestic market. The Government share her concerns that UK pension funds are investing less in the domestic economy than overseas counterparts. There is also clear evidence of a sustained pattern of withdrawal by DC pension schemes from UK-listed equities for at least the last decade. That is why the pensions review is considering whether further interventions may be needed to ensure our reforms benefit UK growth. We will continue to work with the pensions industry to increase investment in UK markets. I look forward to continuing to work with the noble Baroness on these issues and of course I am very happy to meet her.

[Baroness Drake (Lab)]

My Lords, the Government’s recent announcement on measures to spur growth will increase the supply of infrastructure and productive investment for pension funds to invest in, but the fragmented nature of UK pension provision can hamper its ability to invest in such assets—in many instances, it cannot deal with the scale of investment required. Do the Government remain committed to addressing this capability problem as part of their strategy for growth?

[Lord Livermore (Lab)]

I am grateful to my noble friend for her question. I absolutely agree; there is international and industry consensus that scale and consolidation are beneficial to pension funds, driving economies of scale and efficiencies that can be passed back to savers and unlocking productive investment. That is what the Mansion House reforms seek to do. My noble friend talked about the ability of pension funds to invest in productive assets. That is what the infrastructure strategy and the industrial strategy are designed to do. I hope we will see more announcements along those lines at the time of the spending review.