U.K. pension funds that collectively manage over £400 billion ($505 billion) have signalled support for the planned wide-ranging “Mansion House” governmental reforms to the sector, in a letter penned to Chancellor of the Exchequer Rachel Reeves.
Among the 14 signatories to the letter were the £35 billion Railways Pension Scheme, London, the £43 billion National Employment Savings Trust, London, and the £38 billion Border to Coast Pensions Partnership, Leeds, England.
Planned legislation unveiled by Reeves includes overhauling local authority pension fund governance, encouraging the further pooling of assets, and to bring together the country’s defined contribution plans into “megafunds.”
“As well as supporting growth, consolidation has the potential to achieve better outcomes for savers through economies of scale and greater negotiating power. We support consolidation when it is done in the interests of members and represents value for money,” the letter stated, which was penned by industry body the Pensions and Lifetime Savings Association.
Since the Mansion House reforms were first proposed by Reeves’ predecessor Jeremy Hunt in July 2023, the government has explored ways in which both DC and defined benefit pension plans in the U.K. can increase their level of investment in domestic assets.
The letter said the proposed reforms offer additional mechanisms to increase pension investment in U.K. growth while maintaining a strong focus on fiduciary responsibilities to scheme members.
Responding to the letter in a news release, Reeves said: “The Mansion House reforms support growth in the financial services sector and help finance investment across the country. I want to work with industry and stakeholders to deliver pension reforms that increase investment in infrastructure, boost people’s pension pots and grow the economy.”
One proposal from Reeves includes the consolidation of all local government pension schemes, which collectively have assets totaling more than £425 billion ($536 billion), into a single investment pool.
The PLSA and signatory pension funds supported such an initiative, on condition such a reform would be implemented on a “clear and realistic timeline”, according to the letter.
