Liberal Democrats have vowed to push back against the government's controversial Pension Schemes Bill unless ministers remove mandation powers that would allow them to dictate where pension funds allocate capital. The warning comes as the House of Commons prepares for the bill to return from the Lords on Monday, after the upper house defeated the government for a second time on Wednesday evening.
Second Lords Defeat
Peers rejected the government's revised wording of the mandation power, marking the second time they have sent the issue back to the Commons. Liberal Democrat peer Baroness Bowles, who led the opposition, said the concessions offered so far amounted to 'fiddling around the edges' and failed to address core problems within the powers.
The mandation power has been viewed across the Square Mile and Westminster as a power grab to fund politicians' pet projects, such as HS2. Baroness Bowles stated: 'The government aren't the experts on pension investments. They want to choose what to do with retirement savings, rather than the experienced professionals and trustees who must operate in people's best interests.'
Key Objections
The Liberal Democrats have called on the government to address two central objections. First, the subordination of trustees' fiduciary duty, which they argue lowers funds' duty to savers to maximise returns in favour of national growth. Second, the exclusion of listed investment companies and investment trusts on the London Stock Exchange from mandation targets. The opposition expressed confusion at their exclusion, noting that the government's productive financing working group hailed them as a perfect vehicle for investment in UK growth.
Fears have grown among opposition and industry figures that this exclusion locks out billions from established trusts and steers investment towards newer, less-proven vehicles such as long-term asset funds (LTAFs). Conservative peer Lord Lucas called mandation a 'dead end, and at its heart poisonous' during Wednesday's session.
Parliamentary Clock Ticking
The government now faces a pressing choice to back down and negotiate with the opposition as the end of the parliamentary session approaches. Failure to pass the bill through both houses before the session ends could see the government lose the bill entirely. While those opposed have accepted concessions so far—including a statutory cap, a one-time use restriction on the power, and a full sunset on the regime by 2035—they wish to see the bill watered down further.
The Conservatives have also vowed to keep pushing back on the bill, with shadow chancellor Mel Stride previously slamming the government for making savers 'fund the pet projects of Rachel Reeves'. However, pension minister Torsten Bell appears unwilling to back down completely and is pushing to pass the bill with the clause still in place.
