A clause in the upcoming Pension Schemes Bill that can give the government power to mandate UK pension schemes to invest in private markets is “a very wrong tack which could end up reducing people’s (pension) returns”, according to Helen Whately, the UK’s shadow pensions minister.
Whately was speaking at the Pensions UK investment conference in Edinburgh. Earlier in the day at the same event, Pensions Minister Torsten Bell insisted that the power of mandation could only be used to force pension schemes to reach the private markets thresholds set out in the 2025 Mansion House Accord by Chancellor Rachel Reeves.
Whately says: “The Pension Minister insists this power will only be used if the voluntary approach. But the government has set no criteria for what failure looks like. They will simply decide when to pull the trigger.”
Bell noted that the Mansion House Compact, which also placed private markets commitment on pension schemes, was put in place in 2023 by the Conservative Party and launched by then Chancellor Jeremy Hunt. Whately countered that this version was a backstop and a voluntary agreement between the government and participating pension funds.
Whately says: “(Bell) likes to assure people that government doesn’t even plan to use the mandation power, but that is the worst possible defense of bad legislation. If the argument for a power is that it probably won’t be used, you’ve already conceded that you cannot justify having it.”
She also compared mandation to Chekov’s Rifle, the concept in drama that if a gun is shown in the first act it must be fired by the play’s conclusion.
The shadow minister even went so far as to claim that the mandation clause of the Pension Schemes Bill could still be prevented from becoming law, as the legislation is yet to be debated in the House of Lords and ultimately receiving royal assent.