The problems facing the this Labour Government is its lack of conviction. The FT writes this morning
Starmer regime has come to feel bizarrely similar to that of Boris Johnson: for different reasons, there is a vacuum where the principal should be.
In this blog, I argue that this Labour Government is being harassed to a point that it may lose one of its reforms , that of workplace pensions.
The principal of the Pension Schemes Bill has been lost. That principal was that pensions are about improving the regular income people get from private sector workplace pensions, improving the way LGPS works and giving ordinary people a way to deal with the mess of their multiple pots. There are many other things in there to do with superfunds but the whole kit and caboodle is being put at risk by an argument about mandation.
I cannot help thinking there is a wish to drag the Pension Schemes Bill down as part of dragging down Keir Starmer and of making it a little bit easier for one of the many parties who are vying to be the opposition at the next election, to get there. We have reform looking to take to pieces funded and unfunded pensions, we have a Tory party looking to get the glory of the Pension Schemes Bill for themselves in the next Government (they do believe it is largely their Bill).
We have local elections coming up on May 7th and something called a “prorogue” that will mean that the politicians are off on yet another spell away from parliament to look after their constituencies as their constituents vote. We will probably get more buffeting of Starmer over Mandelson and maybe the Americans meeting out retribution for what they see as military betrayal.
The Pensions Schemes Bill is one of the rare Bills that we thought had cross-party support but since Helen Whately , her gang in the Lords and Tom McPhail have gathered together, it looks possible that the Pension Schemes Bill will fall into the vacuum into which Keir Starmer’s Government has been dragged.
@Helen_Whately excellent in the Times this morning on the government’s ill-judged attempt to take control of our pension funds. They’re jeopardising other important legislative measures in the Bill.https://t.co/dC7j7w2III
— Tom McPhail (@PensionsMonkey) April 25, 2026
This is an attempt to politicise pensions. Whately did it in Edinburgh and she continues to in the right wing press. Her principal is based on workplace pension Trustees having fiduciary standards in the interest of their members.
I have this question to those using fiduciary arguments to oppose “mandating”
“why have workplace pensions has such rubbish investments?”. Were they trustees exercising their fiduciary duty or just a way for commercial providers to compete in a price war to the bottom”.
To suppose that the trustees of DC pensions are opposing the CIOs of workplace pensions when they have stuffed our pensions in global diversified equity, using passive funds from a handful of fund managers is rot. They have accepted the strategies of the CIOs who have been driven by those managing the business plans of DC schemes.
It is this reality that Rachel Reeves introduced the idea of mandation when the Mansion House Accord first arrived. She could see that without a threat of mandation, workplace pensions would not put members first and would herd within a value for money assessment that kept everyone investing primarily in American mega stocks.
But so political has the debate about mandation become, that we all believe that DC Trustees are in control, that they act for us members and that they should be left alone.
I say it again, if we had Trustees exercising fiduciary duty, why did we need the Mansion House Accord in the first place? We all know who have most to lose from mandation, it is not members but those who pull the strings on investments. They do not have fiduciary responsibility to worry about, they have shareholders.
I started this blog worrying that this Labour Government has lost its sense of direction. I end it by saying that the point of the Pension Schemes Bill is being dragged into the vacuum. In Wales, where Torsten Bell is an MP, Labour are about to lose power locally for the first time.
How I wish that Torsten Bell, our pension minister , can get his Bill to enactment so we can at least hold pensions up as an area where Labour got things done.
I believe the easiest way for the Government to get the Pension Schemes Bill over the line in this Parliament would be accept the House of Lords amendment on the mandation powers. In that way all the good provisions would become law at the earliest opportunity. If the Government so strongly feels that it needs to take reserve investment mandation powers, it could introduce a separate Bill in the next Parliament. Although I personally suspect that they would not wish to squander Parliamentary time and their present majority on what is essentially a matter from a previous era.
The mandation power has nothing to do with pensions, it is an attempt by the Treasury to force pension funds to jump on a bandwagon which was only partly successful in different countries and market conditions in providing a vehicle for companies to obtain capital for growth plans which could not otherwise be funded without Treasury support.
The problem now becoming apparent in the US is that private capital, not subject to private market disciplines, is that the model only works if the yield from a private capital investment sufficiently outstrips the yield obtained from lower risk investments to compensate from the much higher failure rate associated with speculative investments. Instead the private capital funds are increasing looking to acquire “cash cow” existing businesses, preferably those quoted in markets where dividend yields and p/e ratios are undervalued. UK insurance companies and professional services limited liability partnerships now appear to be preferred targets. Could someone explain to me how this ownership change contributes to UK growth?
This leaves the speculative growth investment as a liability on the private capital fund’s books and for which the only exit route for the investor is to try and persuade another private capital investor that it is worth more to them. The mandation power forcing pension funds to direct their capital into this asset class therefore leads to over-valuation of assets and future relative investment losses compared to other asset classes – to the detriment of the pension scheme member.
In the UK, the lack of speculative investment capital I strongly believe can be put down to the Pensions Acts of 1995 and 2004, which by focusing entirely on failure effectively forced pension schemes (the then significant market players) to disinvest from Sterling based public markets, including AIM etc. That in turn led to a relative fall in the attractiveness of an IPO in the UK and creating a “doom” cycle for UK equities relative to particularly US peers. If the Government seriously wishes to address this, it needs to ensure that DB and CDC pension funds in particular (as long term and growth investors) are no longer managed against failure measures, represented by Gilt or bond yields. One solution would be to get pension schemes to publish and justify their long term investment returns. In that way high returning speculative investments could have a part to play without the use of mandation powers.