The absurd idea of a government-imposed cap on rent died less than 24 hours after it first emerged, but another Treasury scheme took far longer to be abandoned. The government's Pensions Schemes Act, which became law yesterday, included sensible measures such as new rules for consolidating small pension pots and a Value for Money framework. However, one element—mandation powers—sparked fierce debate and galvanized opponents in the House of Lords.
With time running out to pass the Bill before the end of the current parliamentary session, ministers finally gave in to pressure and effectively dropped this contentious proposal, watering it down to what Helen Whately, the shadow work and pensions secretary, described as a 'vestige of the original power.'
What Were the Mandation Powers?
In its original wording, the mandation clause would have granted ministers a 'reserve power' to direct how pension schemes invest, aiming to steer money into private markets and infrastructure projects. The idea followed the Mansion House Accords, where pension funds agreed to a voluntary code to invest more in UK private markets. But for the government, and particularly zealous Treasury minister Torsten Bell, this voluntary commitment was insufficient. Thus, the mandation power was crafted to give ministers the ability to force pension funds to back UK projects.
Why Was This Controversial?
While UK pension funds are notoriously risk-averse and invest less in domestic equities, startups, and infrastructure compared to international peers, this is entirely understandable and proper. As Baroness Bowles, a leading figure in the Lords' campaign to block mandation, maintained: 'The Government isn't the expert 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.'
Thanks to Baroness Bowles and Baroness Altmann, along with Helen Whately's strong opposition, Torsten Bell's power grab was defeated. If this ambitious minister feels aggrieved by the Lords' spirited defence of savers and pension fund trustees, one might recall his own arrogant response to concerns voiced by pension experts at a recent conference: 'chillax.'
