Pension funds back Mansion House reforms in joint letter to Chancellor

The Chancellor of the Exchequer, Rachel Reeves has responded to an open letter, led by the Pensions and Lifetime Savings Association (PLSA) and co-signed by industry leaders who between them manage over £400bn assets under management. It highlights the sector’s readiness to collaborate with the Government and shape the future of pensions in the UK.

Signatories include; Pensions and Lifetime Savings Association, Border to Coast Pensions Partnership, Brunel Pension Partnership, Cushon, Legal & General Investment Management (LGIM), NEST, Peoples Partnership, Railpen, Smart Pension, Surrey Pension Fund, Willis Towers Watson UK Limited, Universities Superannuation Scheme, West Midlands Pension Fund and West Yorkshire Pension Fund LGPS Central.

The open letter underscores the industry’s view that the Pension Review and the Mansion House reforms set a positive direction for the future of the UK pensions sector:

• Supporting UK growth: UK pension funds are already significant domestic investors, with allocations across shares, corporate bonds, government debt, and other assets. The reforms offer additional mechanisms to increase pension investment in UK growth while maintaining a strong focus on fiduciary responsibilities to scheme members.

• Consolidation for scale and efficiency: The letter emphasises that consolidation must prioritise members’ interests, achieving value for money through economies of scale and enhanced negotiating power.

• Advancing governance and local investment: The Local Government Pension Scheme (LGPS) is a unique participant in the UK pensions market. With assets totalling more than £425 billion, the LGPS is the largest funded DB pension scheme in the UK and one of the biggest in the world.
• The industry supports the completion of the transfer of remaining assets and the articulation of the LGPS Pool model, supported by setting clear and realistic timelines to achieve this goal.  A lot of good work is already in place across the LGPS, and administering authorities and pools should take care further work is done in a pragmatic way which maintains value and does not incur unnecessary investment losses or costs.

• Driving value in defined contribution (DC) and defined benefit (DB) pensions: As the industry eagerly anticipates part two of the Pensions review, we hope to see further measures brought forward that look at the long-standing issue of pensions adequacy, that set out a roadmap to address the level and scope of current AE contribution rates. We would also welcome further clarification on Government ambitions for the future of DB schemes, especially around treatment of open schemes, surplus sharing and consolidation measures in this area.

• Climate Leadership: While not part of the Mansion House reforms, the letter highlights the financial sector’s critical role in addressing climate change, welcoming recent ESG-focused consultations and transition planning initiatives as complementary to the growth agenda.

The full letter can be read here: Pensions industry welcomes Mansion House reforms

Julian Mund, CEO at the Pensions and Lifetime Savings Association, said; “The UK pensions sector is a cornerstone of our economy, with nearly £1 trillion invested in UK assets. By working closely with the Government on the Mansion House reforms, we can ensure the system delivers greater value for savers, supports long-term economic growth, and advances our climate ambitions.

“Consolidation, stronger governance, and economies of scale will drive better outcomes for members, but it must be done pragmatically. By aligning with government proposals and safeguarding fiduciary duties, we can secure the best possible future for savers while boosting investment in UK assets and ensuring the system remains globally competitive.”

Chancellor of the Exchequer Rachel Reeves said; “The Mansion House reforms I announced, support growth in the financial services sector and help finance investment across the country.

“I want to work with industry and stakeholders to deliver pension reforms that increase investment in infrastructure, boost people’s pension pots and grow the economy.”

The Pensions and Lifetime Savings Association and its members stand ready to support the Government throughout the review process, offering their expertise and insight to ensure the proposals deliver lasting benefits for savers and the wider economy.

Mark Smith, Head of Media Relations
020 7601 1726 | [email protected]

Cali Sullivan, Senior PR Manager
020 7601 1761 | [email protected]