The timing of the story suggests a midnight embargo. The FT (never to be caught short on a scoop) is also running the story as a budget leak. The Telegraph    Bloomberg  and Citywire are all running the story. this is not so much a leak but a calculated campaign on behalf of the Treasury

A second #Budget2024 move will see UK defined contribution #pension funds required to disclose their UK assets from 2027.

This builds on previous measures by UK Govt to get pension funds, managing billions of pounds, to invest more widely in the UK.https://t.co/W7eKr7GVw6

— Josephine Cumbo (@JosephineCumbo) March 2, 2024

The boost to Britain

Bloomberg lead with the “back Britain” story

The Treasury will require pensions funds to publicly disclose how much they invest in UK businesses, part of government efforts to spur them to boost investments in UK assets.

The FT tells us that this is being resisted by the FCA.

The Financial Conduct Authority has refused to commit to writing new rules wanted by the chancellor that would force pension funds to disclose how much they invest in the UK, people familiar with the matter said.

The FCA regulate the pooled funds into which our workplace pensions are mostly invested and they the insured investment platforms that offer the investment administration. Finally they regulate the insurance contracts behind personal pensions and SIPPs designated by many employers for auto-enrolled workplace pensions

They don’t however  have any powers over the decisions taken by trustees on how our workplace pension default funds are invested nor the choice of self-select offered to members of occupational pensions (including master trusts).

So the reported reluctance of the FCA to commit to writing pension rules is unsurprising. What is needed is actions that commits all pension companies from Pension Bee to Nest, from Aegon to USS, to a compact. The Australians have worked out that you bring heterogenous pension providers together by committing them to one over-riding purpose. The Australian pension’s purpose does not commit pension schemes to any asset allocation parameters but Super schemes do have to disclose the outcomes of their investment strategies and are judged on how they have done.

The Chancellor appears to want to intervene at both ends – both how the money goes in and how it comes out of the sausage machine. The use of “transparency” in the following statement is about as strong a nudge as the Treasury can make without getting the backs up of the free-marketeers within its midst.

The chancellor also wants to use transparency — or rules around disclosure of investment decisions — to encourage them to invest in the UK. “It’s a very British solution,” said one official involved in drawing up the policy. The Treasury said it was working “constructively with relevant partners, including the FCA, on pension fund policy”. “We remain committed to growing the economy and increasing investment in UK businesses,” it added.

And the Chancellor expects decision making by employers and members on where their money goes to be based on a value for money assessment that takes into account the extent of investment in the UK

Expect to hear howls of derision from investment experts pointing to the relative returns of the US market (S&P up 30%) and the FTSE 100 (down 3%) over the last year. Linking investment in Britain to value for money will be a tough trick to pull off!

Jeremy Hunt should openly support Ros Altmann and Sharon Bowles

Two people who have been banging the drum for tax-payer incentivised pension contributions to be invested in Britain are Baronesses Altmann and Bowles who initiated an important debate on the future of UK investment companies (trusts) in the House of Lords this week. She writes on linked in

A really important and powerful debate in @UKHouseofLords today. Unanimous support for urgent action to stop #FCA harm to UK #investmenttrusts #REITs and the damage to wider UK stock markets and the economy. Let’s hope common sense will prevail. Here are the speeches of Baroness Sharon Bowles and myself  but will also send others when I can, as all speeches were excellent

Where the value for money in British investment does shine through is in the investment in technology funded by private money into which the public can invest through the vehicles that Altmann and Bowles are promoting. The current rules on investment trust disclosures make it hard for DC funds to invest in them. The Government can and should do something about this and they should act on this excellent debate.

Appendix- The details

As I can’t find the Treasury statement, I’m relying on Professional Pension for their version of what Jeremy Hunt put out.

Chancellor Jeremy Hunt has today (2 March) announced proposals to force defined contribution (DC) plans to publicly disclose their level of investment in the UK and improve the performance of poorly performing schemes.

Under the chancellor’s plans, which have been announced by HM Treasury ahead of next week’s Spring Budget, DC funds would be required to disclose their levels of investment in British businesses, as well as their costs and net investment returns.

They would also need to publicly compare their performance data against competitor schemes, including at least two schemes managing at least £10bn in assets.

In addition, poorly performing schemes would not be allowed to take on new business from employers – with The Pensions Regulator and the Financial Conduct Authority (FCA) being given a “full range” of intervention powers.

HM Treasury said while the rollout of auto-enrolment (AE) has resulted in a substantial increase in the amount of investment UK pension funds can deploy, from £90bn in 2012 to approximately £116bn in 2022, the current disclosure requirements for DC pension funds were “inconsistent” and do not require a breakdown of their UK investments.

It added this made it difficult for policymakers and members to understand where assets were invested – noting that by ensuring pension funds disclose where they invest and the returns they can offer members, it would make it possible for employers and savers to compare schemes to make “informed choices”.

HM Treasury said the measures came as part of its broader value for money framework (VfM) reforms to improve the outcomes for savers and to consolidate the DC market and to ensure schemes are focused on securing good returns for savers.

HM Treasury said the plans were subject to a consultation by the FCA, which would set out the next steps for these reforms in a consultation in Spring. It added the government and FCA have existing powers which can be used to implement the UK investment disclosures if necessary to ensure these disclosures are made by 2027 but noted primary legislation would be required to introduce the full framework, something the government would bring forward “as soon as parliamentary time allows”.

Hunt said: “We have already started on a path to drive growth, unlock capital for our most promising companies and improve outcomes for savers – and these new rules mean employers and savers can see how their money is invested and how the returns compare to other schemes.

“British pension funds appear to contribute less to the UK economy than international counterparts do as they invest less in our domestic businesses. These requirements will help focus minds on how to improve overall returns and outcomes for savers.”

Secretary of state for work and pensions Mel Stride added: “The incredible success of AE has opened up a huge opportunity to grow the economy, boost British businesses and fuel our futures. It has helped us transform the pensions landscape over the last decade.

“And our VfM framework will take this one step further, focusing pension managers on their number one priority – securing the best possible returns for savers – as well as providing a boost to the wider economy.”

TPR chief executive Nausicaa Delfas commented: “Millions of people rely on a pension to support them in later life. That’s why it’s so important that we make sure all pension savers receive value for money.

“With more disclosure helping to spark competition between schemes, and enhanced powers to crack down on poor performers, we can really deliver for savers, now and in the future.”