So it came as no surprise that on Friday morning we woke up to a new Labour Government.  But what might this mean for the pensions industry?

At the time of writing, new Prime Minister Keir Starmer has yet to appoint a Pensions Minister.  With the appointments of non MPs Sir Patrick Vallance as Science Minister and James Timpson as Prisons Minister via elevations to the House of Lords, Prime Minister Starmer has demonstrated he is willing to put those with expertise in positions where their experience will be valuable – is it too much to wish the same for the Pensions Minister position?

The incoming Pensions Minister, whoever they may be, will certainly have a very full, very complex portfolio to get to grips with.  The Labour party manifesto has promised us a “review of the pensions landscape” with the dual focuses of assessing a) how to improve pension outcomes and b) how to increase investments in UK markets.  We can therefore expect to see both market consolidation and productive finance remain high on the agenda, as they had been under the Conservative party’s Mansion House reforms.  We would like to see the new Government’s pensions eco-system review, which will encompass both private and public sector arrangements, engage fully with stakeholders in the industry who will have valuable insights and perspective to offer on both the challenges for pensions and possible future solutions. 

Whilst the initial review promised by the new Government looks to have a similar consolidation / productive finance-based focus to the previous Government’s Mansion House reforms, in the longer term we may anticipate some degree of shift in policy direction.  With significant reforms to employment law promised, we may see the new Labour government look again at workplace pension rights – perhaps increasing auto-enrolment contribution rates or extending obligations to seek to address longer term concerns over pensions adequacy.  With a wave of insourcing of public services promised, will we see more wholesale changes to existing public service pensions arrangements?  And what impact will the new revenue-raising policy of adding VAT to private school fees have on pension arrangements for those institutions? Climate change is likely to be a key area of focus – the Labour party manifesto has pledged to make the UK the “green finance capital of the world” and to require pension funds and other financial institutions to “develop and implement credible transition plans that align with the 1.5 °C goal of the Paris Agreement” but what will this requirement look like and how will it be implemented?.

From the legal perspective, many of our clients have a long wish-list of issues where they would welcome early engagement from the new Pensions Minister – for DB schemes, the most immediate request will be sight of the Pensions Regulator’s new DB funding code (to accompany the regulations which come into effect for schemes with valuation dates from 22 September 2024) but there are a host of other outstanding and ongoing legal issues.  Pensions dashboards timetables (is the single connection deadline still desirable / achievable?), the extension of automatic enrolment (legislation enacted but not yet in force), ironing out wrinkles in the abolition of the lifetime allowance (regulations delayed by the election), the outcome of the Virgin Media appeal (and any related DWP engagement with the issue), notifiable events (will the new regime ever see the light of day?) and, for DC schemes, the promised consultation on new value for money requirements are all high on schemes’ day to day agendas.

The new Parliament is due to meet for the first time tomorrow, Tuesday 9 July, and the Kings’ Speech, in which the new Government will set out its priorities, is scheduled for the following Wednesday (17 July).  At this stage, we’re not expecting any significant pensions announcements as part of that speech but nevertheless will be watching closely for any clues as to the future direction of travel as the Government sets out its immediate policy agenda.   

This blog post is current as of 10.30am on Monday 8 July 2024