Business: Pensions

(asked on 13th April 2021) - View Source

Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what types of businesses will be able to access equity from pension funds under the new pension reforms; and what steps she plans to take to reach a decision on how much of a pension fund can be released for investment in businesses.


Answered by
Guy Opperman Portrait
Guy Opperman
Parliamentary Under-Secretary (Department for Transport)
This question was answered on 19th April 2021

The government are committed to ensuring both that pension funds have the opportunities to invest in UK businesses as we build back better, and that this process is made easier and simpler. We believe this will benefit both individual pension scheme members and the wider UK economy.

Private equity and venture capital, including releasing equity to new and innovative British businesses, already can and does form part of a pension scheme’s investment strategy. Trustees are currently free to make these types of investments if they believe the balance of risk and return to be in the best interest of members.

Over the past 6 months, DWP has made real efforts to respond to trustees and make this process simpler and easier: DWP has published two consultations relating to this issue. Improving outcomes for members of defined contribution pension schemes: https://www.gov.uk/government/consultations/improving-outcomes-for-members-of-defined-contribution-pension-schemes and, Incorporating performance fees within the charge cap: https://www.gov.uk/government/consultations/incorporating-performance-fees-within-the-charge-cap

The proposals included allowing schemes to smooth the incurrence of performance fees over multiple years to allow schemes greater flexibility to innovate their investment strategy whilst maintaining the important member protection that is the charge cap. We intend to bring forward regulations which seek to make investment in a wider range of assets easier for defined contribution schemes.

Through the consultation we also gathered evidence on the specific question of steps the Government can take to better enable these types of investments. The consultation closed on April 16th and we will publish a response in June.

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