Pension Schemes: Ministerial Powers

Baroness Kramer Excerpts

Wednesday 11th March 2026 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, to be clear, the Government designed this power specifically to backstop the Mansion House Accord, and that is our intention. I am always open to suggestions of ways to make that clearer than we have tried to do so far. I had a great opportunity to talk to many Members of the House about this and many other issues, and I am happy to carry on doing that. There is a very simple way for any of the Mansion House signatories to make sure that this power is never used: to keep to the voluntary commitments that they have already made. If that happens, there will be no need for the power ever to be used and the Government will not bring it in, so everybody will be happy. That is the simple way forward.

[Baroness Kramer (LD)]

My Lords, under the Mansion House Accord, and the mandation that now sits behind it, people on the lowest incomes will find 10% of their pensions put into high-risk illiquid assets. Given that that pool of assets is currently in very serious trouble thanks to illiquidity—this was prior to the Iran war, which is going to burst the bubble—will the Minister say that, if she forces this through, the Government will backstop the losses that will happen for those people on the lowest incomes, so that their pensions are not wrecked when they reach retirement?

[Baroness Sherlock (Lab)]

My Lords, first, as I have said before, the Government are very clear—and the Bill makes clear—that were the power ever to be used, the Government must commission a report that will look at the state of the market and the impact on savers’ interests, as well as wider impacts, before using the power. If what the noble Baroness is describing were to be the case, that would become evident, and it would of course affect the Government’s decision.

Secondly, and, again, just to be clear, it is because we want to look after the interests of savers that we want to tackle the fact that, by international standards, UK pension funds invest tiny amounts of money in private finance, and therefore, as a result of not investing in private assets, it is savers—those savers whom the noble Baroness specifically describes—who are losing out because they are not getting the returns that they need. These are the default funds, so savers who know lots about this, and who will want to make judgments on making sure that their assets are in the right place, are already doing that. It is not serving their interests if these default funds are being put simply into passive investing or things that will not bring the long-term returns.

Finally, this goes back to the fact that the trustees are not being directed to invest in any specific asset or particular project. If the power was ever to be brought in and they were asked to do this, and if they believed that it was not in their interests, then we would expect them to apply for an exemption to protect the interests of their members. If there was something about their members—in the way that the noble Baroness describes—that was relevant, they would simply have to provide that evidence. That is what the savers’ interest test is for.