The Labour government is facing fierce criticism over what opponents are calling a "war on savers and pensioners," driven by a double-barrelled assault in the recent Budget and new pension legislation.
A Budget Blow to Retirement Savings
Shadow ministers Helen Whately and Mark Garnier have accused Chancellor Rachel Reeves of punishing millions who are "doing the right thing" by saving for their future. The central fiscal measure under fire is the decision to cap salary sacrifice schemes, a move forecast to generate nearly £5 billion in extra tax revenue by the 2029-30 financial year.
These schemes have long helped individuals boost their pension pots by sacrificing part of their salary before tax. The government's cap is branded not as a minor adjustment but a "deliberate throttling" of a key mechanism for long-term saving. Critics argue this directly disincentivises saving at a time when pension adequacy is already a critical national issue.
The 'Dangerous Precedent' of Investment Mandation
Parallel to the Budget, Parliament is debating the Pension Schemes Bill. Buried within it, opponents highlight a contentious new power that would allow ministers to mandate how private pension funds invest their assets.
While the government describes this as a mere "backstop," industry bodies have reacted with unified alarm. The Association of British Insurers (ABI) deems it unnecessary, the Pensions Management Institute labels it a "dangerous precedent," and Aviva warns the power "goes far beyond" what is justified. This power, critics say, fundamentally undermines the fiduciary duty of trustees to act solely in the best financial interests of scheme members.
"Trustees are not there to fulfil manifesto promises or chase political pet projects," the argument states. The fear is that political aims, such as tying investments to the Paris Agreement or funding nationalised utilities, could trump the imperative to secure the best returns for pensioners.
Legal Minefield and Political Dismissal
The proposal also opens a significant legal question: if a government-mandated investment fails, who is legally accountable—the trustees compelled to obey or the ministers who issued the order?
Despite these serious concerns, the government has been accused of dismissing them. At a recent industry conference, the pensions minister reportedly told attendees to "chillax." Meanwhile, critics argue the government should first diagnose why funds aren't investing more in UK assets rather than reaching for the "mandation lever."
Conservatives contrast this approach with their own philosophy of encouraging work and saving, admitting past mistakes but pledging to own them. The core charge remains that the government is treating the nation's hard-earned life savings as a "piggy bank" for the Treasury to raid, risking the financial security and dignity of pensioners across the UK.
