The Government’s plan to set a minimum size requirement for multi-employer DC funds could face a challenge on grounds of discrimination against religious groups.
Chancellor Rachel Reeves used her Mansion House speech yesterday to argue there should be a £25bn threshold for workplace pension schemes, a bar that would reduce the number of multi-employer DC schemes from a current level of 60. She said the Government will consult on setting a minimum size requirement for these funds to ensure they deliver on their investment potential.
But independent trustee Andrew Cheseldine, who is a trustee of the BCF Pension Scheme, an authorised master trust run for the Plymouth Brethren, says forcing this scheme to consolidate into bigger entities would go against the community’s religious beliefs.
This very small scheme is designed to meet the religious beliefs of this community, and is only permitted to invest in cash, gilts and Plymouth Brethren investments. It has a tiny membership, running to single-figure thousands, and its total assets are nowhere near £1bn, let alone the £25bn threshold.
This is not the first time pension policy has been influenced by the beliefs of the Plymouth Brethren. In April 2006 the obligation to buy an annuity was removed in part because the Plymouth Brethren disapproved of the product because its process of pooling longevity effectively involved taking a profit from the death of another individual.
Cheseldine says: “I don’t disagree with the concept of consolidation, but if this is forced then it will be potentially discriminatory. As a trustee of the BCF Pension Scheme, which serves the Plymouth Brethren, forcing consolidation into a bigger scheme is challenging. And how will the new rules deal with Shariah and ethical funds?”
The Government’s consultation does ask whether there are schemes with specific characteristics that mean that it would be in the public interest for them to be excluded from these proposed policies. They would still be required to meet VFM obligations.
The Treasury has been contacted for comment.