The House of Lords has voted to remove the power to mandate the asset allocation of pension schemes from the Pension Schemes Bill.
The bill will now return to the Commons for MPs for further debate, over mandation and other contested topics such as the scale test and dormant small pots consolidation.
Last week Pensions Minister Torsten Bell had defended the mandation clause, insisting it could only be applied to the provisions agreed in the voluntary Mansion House Accord.
However, at the same Pensions UK event, shadow pensions minister Helen Whately was highly critical of mandation, claiming the powers as written were excessively broad.
In the Lords debate on mandation, Baroness Coffey, former deputy prime minister and work and pensions secretary, says: “This is not the government’s money. There seems to become an attitude that… government are going to tell people what to do with their cash now. It’s somebody’s salary, it’s their choice of what they do with it, and they’re taking her pay.”
Coffey also critiqued the lack of a human rights assessment regarding the bill, explaining she had contacted the attorney general over the matter. However, both Coffey and Whately continued to express support for the voluntary Mansion House Accord.
Zoe Alexander, executive director of policy and advocacy at Pensions UK, also commended the mandation clause being removed from the bill, claiming savers would no longer be exposed to “political cycles”, and the fiduciary duty of trustees would not be undermined.
Helen Forrest Hall, chief strategy officer at the Pensions Management Institute, said: “Mandating how schemes invest risked exposing savers’ pensions to political influence and weakening trustees’ fiduciary duty to act solely in members’ interests. Removing the power helps protect the independence and professionalism that underpin good outcomes for savers.
“There are many positive measures in the Pension Schemes Bill which offer meaningful opportunities to strengthen the system. The PMI urges the Government to focus now on their successful implementation, and we look forward to working with them and industry to achieve this.”