Reading the thinking of the pension chiefs who will be meeting Rachel Reeves on Monday, I wonder if they have got the message. Rachel Reeves is not happy with the status quo and holds the pension industry responsible for failures in delivery. Speaking on Laura Kuenssberg’s politics program on Sunday morning, it is clear that she feels change is needed and she want the pension big-wigs to be the agents of that change.

Here is my thinking; the pensions industry has reacted to the Pension Schemes Bill as if it continued the direction and progress of the past ten years. Clearly it doesn’t. Labour are moving a a fast pace and in a clear direction of travel. Over the summer recess, those who guide the pensions industry will need to consider the implications of what is being said and adapt to a new paradigm. Here are my five reasons for believing that business in future will be unusual.

1. Getting things done – there is a ready baked Pension Schemes Bill which could become an Act this year. Action not consultation.
2. There is a new tone about making the most of what we have
3. The industry clamour to see more money  coming into the pension system is being resisted
4. Pensions are not being nationalised (the PPF is not central to consolidation or seeding investment in the new growth funds
5. There is a new conviction around the payment of pensions (not the management of pots).

Nobody thought there would be a Pension Schemes Bill within a few days of a general election. Once it had been announced senior commentators were keen to play it down as Business As Usual and a continuation of a previous Government’s direction of travel.

This is to forget that in the eight years since Steve Webb’s departure in 2016, there had been only one Act on Pensions, one that will largely be forgotten as a damp squib in terms of how we save and spend our private pension pots.

All of the past five years has been reactive. Pensions were not impacted by COVID, the Government shielded them through its furlough intervention in the workplace. This was of the Treasury’s doing. The 2022 disaster when DB pensions lost £600bn and DC pensions half as much again, resulted in the Treasury , BOE and PRA cracking down on secondary lending to pension schemes.

What came out of the DWP was a string of consultations which have led nowhere. There has been no clear policy statement on how private and public sector pensions and the state pension work together, no clarity on how pensions interact with social care and our health service, we have become confused by pension freedoms, we don’t know what we are doing.

This lack of direction has stifled innovation. The ambitious intention of the Mansion House Reforms has been diluted by concerns about fiduciary duty. Government has failed to make the case for investing for growth, allowing Mansion House to be interpreted as a replacement for PFI. The idea that investing in Long Term Assets can deliver real returns of 5%+ has been swerved so we now consider investing in illiquids, like investing in sustainability as against the interests of savers and pensioners.

Innovation in terms of making pensions more efficient by allowing trustees and employers to sign over their pension schemes to superfunds has also been stifled. The only superfund to make it over the line has consolidated only two schemes, capital backed journeys for pension schemes to ease pressure on sponsors have been in short supply. There has been precious little development in the DB master trust space. We await the details of the Pension Schemes Bill but the fact that a new Government is prioritising the private sector to get on with this is telling.

Investing better by creating economies of scale and ripping out advisory and fiduciary costs is central to the Pension Schemes Bill. The third prong in the fork that digs up the ground is the emphasis on payment of pensions.

Insisting that Trustees offer pension rather than pots as the default spending solution for occupational DC schemes is considerably more radical than it sounds. The failure of the Conservatives to get any enthusiasm behind CDC or any other variant of collective pensions is in sharp contrast to the public’s oft repeated statements that they want to live off pensions not pension pots in their later life.

Simply abandoning savers to third party choice architecture based on the FCA’s investment pathways is not enough. Schemes will need to become full service pensions, offering within them , fiduciary management of the pension itself. This will fill employers with horror and hasten the flight to master trusts. Few employers want to directly sponsor a pension scheme for which it is ultimately accountable for outcomes.

As for the funders of master trusts, the Pension Schemes Bill looks like requiring them to raise their game so that DC schemes start looking a lot more like hybrids, perhaps offering CDC in decumulation, perhaps a bridge to buy-out, perhaps DB scheme pensions.

Most importantly, the Pension Schemes Bill is not demanding more money from pension scheme savers through auto-enrolment contribution defaults. I was struck by an anecdote in JD Vance’s autobiography on how he became furious when Michelle Obama announced that she was growing vegetables in the White House to remind the nation’s poor to eat better. His anger was based on his childhood where his family could not afford the recommendations made to them by well meaning liberals. It is easy for academics to point to the lack of adequate pensions for the poor but very hard for the poor to do much about it. Preaching leads to resentment, Labour knows this. The lobby demanding us save harder for longer needs a sense-check. Hopefully this will come with the impending review of workplace pensions.

In all this there is something new. Labour were not expected to publish a Pension Schemes Bill till they had gone through the exhaustive process of a workplace pensions review. They have confounded expectations. Labour has resisted temptation to use state apparatus to solve private pension problems. Not only does the PPF not get a look in , but Nest , MaPS and Pension Wise are conspicuous by their absence, the pension dashboard is not being held out as a panacea, the Pensions Regulator is not getting more powers and the Bill is silent on  DB funding code.

Instead , the Bill promotes making more of what we have and the only state intervention in terms of restrictive behavior is the ongoing threat to failing pension schemes that they will be forced to cease taking contributions and wind up unless they deliver on value for money.

I foresee in this , a tightening of belts, especially among those offering advice, funds and member services to occupational schemes. The last 8 years have seen us on easy-street, basking in the reflective glory of the public policy success story of auto-enrolment. That can be milked no longer, it is now time for the pension industry to move on and accept a new climate where business in the future will be unusual.